Wall Street's lament: "Burned by Obama"

CNBC's Charlies Gasparino has a nutty scoop: The White House has frozen out Geithner and Summers

Published September 30, 2009 9:27PM (EDT)

If your mind isn't already reeling this week after learning that government deficits are proof of America's moral decay, or that high unemployment has a silver lining, or that the U.S. Chamber of Commerce has never challenged the science of climate change, or that a military coup is the only reasonable solution to the "Obama problem," well, I have one more for you: According to an opinion piece in the New York Post by CNBC's Charlie Gasparino, Timothy Geithner and Larry Summers have been complaining to their Wall Street buddies that "they have almost no say in major policy decisions."

This unsourced allegation is offered in support of the thesis that Obama's Wall Street backers -- people like JPMorgan Chase's Jamie Dimon or Goldman Sachs' Lloyd Blankfein -- are feeling betrayed by Obama's "class warfare" rhetoric and are now experiencing buyer's remorse.

What a difference a year makes. They won't admit it in public -- but in private conversations, the top guys on Wall Street are feeling burned.

The guy who seemed like such a steady voice -- vowing to curb runaway spending and restoring order to the banking system and the economy as a whole -- is instead so driven to achieve his big-government policy goals that he and his policy people are ignoring their own economic advisers on the severe economic costs that his agenda will cause.

Think about this for a second. From the left's perspective, Geithner and Summers are generally regarded as having far too much influence on government policy towards Wall Street. In return for extraordinary assistance from the U.S. government, Wall Street's biggest financial institutions haven't even received slaps on their wrists. Obama has bent over backward to disavow any threat of nationalization, or even any move towards breaking up banks that are manifestly "too big too fail." We are a long way from any real regulatory reform, and every week seems to bring us more evidence that whatever does end up becoming law will be weak medicine indeed.

In a week full of mindboggling gobsmackery, Gasparino manages to set himself apart. For example, Gasparino also complains that Obama isn't consulting Paul Volcker, the former Fed chairman. But Volcker has been counseling a more aggressive approach to fixing the banking system than Summers or Geithner, one that would presumably outrage Wall Street even further. In fact, the early buzz in reporting on the Obama White House is that Larry Summers had cut Volcker out of the loop. Choose one or the other, Charlie, but don't pretend that Obama is ignoring both, because it just makes you look silly.

Then there's this:

It's almost the opposite approach, the Wall Street crowd complains, from the last Democratic president, Bill Clinton, whose main first-term achievement -- deficit reduction -- was crafted by his chief economic adviser, Robert Rubin.

Like Obama, Clinton and Rubin promised to raise taxes on the "rich," and they did. But Clinton didn't raise taxes to embark on a wild-eyed redistribution of wealth and massive programs.

Perhaps Gasparino missed this, but when Obama took office the economy was in drastic freefall. Deficit reduction would have been an extraordinarily stupid move at that point -- dare we say, a Herbert Hooverish move? And of course Clinton did intend to reform health care, and did want the United States to ratify the Kyoto Protocol. But he failed. As for Rubin? He he went on to a senior position at Citigroup, where his tenure did not end up enhancing his reputation.

But perhaps most amazing: By any objective stance, Wall Street should be delighted at what Obama has managed to achieve. When Obama took office, GDP was contracting at a 6.4 percent annualized rate. That shrank to a 0.7 percent rate in the second quarter. The Dow Jones Industrial Average just registered its best quarter in 11 years, rising 15 percent. That may not mean a whole lot to the average American facing unemployment and a home foreclosure, but it's absolutely terrific news for Wall Street executives, banks, and hedge funds. If that isn't "restoring order to the economy as a whole" what exactly would Gasparino prefer?

And then there's "wild-eyed?" WILD-EYED?! Has Gasparino ever watched an Obama speech or press conference? Obama's a lot of things, but wild-eyed is not one of them. Gasparino may not like Obama's agenda, but tackling healthcare and climate change is hardly the stuff of madness. You want examples of wild eyes, you have to look at the other side of the political aisle. Over here, in the reality-based community, we'd appreciated if Obama started rolling his eyes just a little bit more.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Bank Bailouts Barack Obama Federal Deficit How The World Works U.s. Economy