Bankers went on the record in the paper of record this week to express their displeasure with the anti-Wall Street rhetoric emanating from the president and Democrats in Congress. Democratic anti-Wall Street rhetoric has apparently gotten so heated that bankers and their lobbyists have decided to teach the Democratic Party a lesson by spreading their financial largesse to the GOP. Had the Democratic National Committee planted that story, it could not have done more to help Democrats as they seek to retain control of Congress this November.
Consider this: populist anger at Wall Street is at an all-time high.
Whether justified or not, it is entirely understandable that a rocketing unemployment rate, extensive mortgage defaults and bailouts for banks and their counterparties have led voters to loathe Wall Street. Banks like Goldman Sachs earned record profits
last year even as taxpayers were forced to bailout AIG , which ensured that Goldman was able to recoup the almost $13 billion it believed AIG owed the firm. This comes on the heels of what most people believe are exorbitant banker salaries at the exact same time that more and more Americans are finding it harder to make ends meet.
But is this is the narrative Republicans want?
Do they want to be part of a story where voters perceive Wall Street to be so mad at the Democrats that they think bankers will have an easier lot with the GOP? The political desk at the White House and the DNC must be salivating at the gift Wall Street is giving them by complaining that Democrats are too tough on the industry.
The real story, of course, is that Wall Street is throwing a temper tantrum for no reason. Kelly S. King, who sits on the board of an organization that lobbies on behalf of the largest bank, made a telling point when he conceded that he understood “the public outcry. We have a 17 percent real unemployment rate, people are hurting, and they want to see punishment. But the political rhetoric just incites more animosity and gets people riled up.”
Mr. King and others on Wall Street and in Washington must know that the rhetoric emanating from both ends of Pennsylvania Avenue resemble an episode of Seinfeld: it’s a show about nothing. Yes, former Federal Reserve Chairman Paul Volcker may have stood at President Obama’s side at a hastily convened press conference, which was set up as a response to the loss of a senate seat. Rhetorically, the president gave a strong speech and chastised Wall Street for its excesses. Politically, it was a slam-dunk.
But does anyone really believe that our politicians have the ability to implement the Volcker Rule at a time when a single senator can place a hold on 70 federal nominees because he wants more earmarks for his home state of Alabama? Does anyone truly believe that the senate will vote to create a Consumer Protection Agency when a single senator can hold up a non-controversial nomination for almost a year because he wants more earmarks for his home state of Missouri? Does anyone believe that Congress will truly enact a bulletproof proprietary trading ban when it takes 60 votes in the senate to get virtually any business done?
The sad truth is that our financial system does need real reform to ensure that the excesses that caused the financial meltdown are not allowed to happen again. The even sadder truth is that our government has ground to a halt and there is no leader, Democrat or Republican, on either end of Pennsylvania Avenue, who can step up to break the gridlock. All the populist rhetoric emanating from the mouths of politicians on both sides of the aisle may be sincere but there is absolutely no will to ensure that words turn into action. So even as bankers threaten and throws tantrums, they would be wise to remember that they are the greatest beneficiaries of the paralysis plaguing our body politic.
Sleep well, Wall Street. It will be business as usual tomorrow.
Julie Roginsky is a CNBC contributor who has extensive experience in government, politics and public relations on both the federal and state levels including serving as the Washington communications director for former Senator Jon Corzine.