President Obama is the one who still doesn’t get it. In an administration fiendishly adroit at stagecraft, he chose an exclusive interview on “60 Minutes” last night to bash bankers with the “f” word—“fatcats,” he called them—just 16 hours before his scheduled sitdown with the chiefs of J.P. Morgan Chase, Bank of America, Goldman Sachs and other banking giants.
What an icebreaker!
That impolite precursor on “60 Minutes,” especially when it comes from a guy who most times
is charming and almost too ingratiating, shows a President torn between pious populism and prosperous capitalism. Obama needs the support and confidence of big banks to mend the economy, yet he woos them with threats and browbeating and name-calling.
Bam exhorts the banks to pull off feats that are competing and contradictory. They are told to toughen up and brace themselves better for rough times, yet at the same time they should loosen up and expand lending in an economy that still hasn’t fully healed. Go ahead and increase the risks you take—but please be sure to slash your own compensation and cap any upside for placing those riskier bets.
The banks face new pressure to increase capital reserves, contribute to a new $150 billion meltdown fund, endure a profit plunge under new derivatives regulation, earn lower returns in credit cards because of new restrictions—and President Obama is sulky because these “fat cats” aren’t doing enough to pass out free money all around?
Isn’t easy money what got us into the Big Meltdown in the first place?
“You guys caused the problem,” Obama says of the big banks in his little tirade on “60 Minutes.” Right—let’s ignore Fannie and Freddie, and Congress’s bipartisan effort to make home ownership easy-breezy for millions, and regulators for weakening capital standards, and the Fed for leaving interest rates too low for too long, and hedge funds and pension plans and individual investors for loading up on too much risk.
How can a President who is supposed to be so smart be so ignorant? Political convenience, I guess.
President Obama’s motivation here is clear: Because Washington bailed out the banking behemoths in the now much-distorted Tarp program, they now must do whatever the President says. Even when it runs counter to their expertise and judgment as bankers.
Somehow, I trust Jamie Dimon of J.P. Morgan Chase and Lloyd Blankfein of Goldman Sachs to make better decisions than President Obama and his minions, whose ranks include far too few seasoned business executives.
But even if President Obama is right—the banks owe us, they gotta pony up and submit—his methods are wrong. Every good manager knows: You praise in public, and criticize in private. Business is a relationship, guys. How you make people feel, how you motivate them and work with them, is key to success.
Bam doesn’t know any of that because he basically has never really worked in business. Maybe he needs to hire yet another czar to work on this for him.
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