Article: Public Flogging

A friend and I are debating the issue of President Obama's approach to the crisis in finance. He is aghast, disconsolate, up-in-arms, a true Blue member of the populace, incensed and outraged. He focuses on Timothy Geithner, whom neither of us wanted to lead this effort for the President. Like Maureen Dowd we both would prefer a public flogging to the outright suicides recommended by the "gentleman" Senator from Iowa on Tuesday. As an alternative, an "action poll" of a sort, I am wondering if the names of the AIG employees and former employees who received bonuses can be published, letting the cards fall where they may as a result, perhaps mayhem, perhaps nothing at all. I for one would hate to see any of these perps employed in finance ever again. But I have not been honest with my friend, although I have felt myself buoyed up on the current populist enthusiasms abroad in the land. I agree with those who say that taking back the "bonuses," which amount to 0.09% of the bailout money "given" to AIG, is more likely to foolishly expend the good populist energy we now have mustered in this lynch mob than conserve it for the more difficult tasks ahead. When I speak of populist energy I am speaking of Congressional courage, too, of course. Barack Obama is not a callow fool. He was purposefully opaque about the cure for our ills, the nature of change he wants to assemble. He knows that c o n f i d e n c e is the critical factor on both Main and Wall streets, so he has to fashion a process that restores confidence on both streets simultaneously, even though they are different kinds of confidence. And that means that populist uprisings, like any cheap thrill that is over before it accomplishes anything useful, are not useful. Better to take the family to the local amusement park and ride the rollercoaster until the urge to flog subsides. Obama also knows that confidence on Wall Street is a different matter. Here we are dealing with a relatively few people (compared to Main Street) and that if too heavy a hand is laid on their shoulders, they may well react rather than respond. A reactive posture by Wall Street, although managable, will make the inevitable imposition and re-imposition of needed regulations more difficult, protracted, and prey to various kinds of rightwing bombast and demogoguery. Obama wants these Wall Street people to see that he has solved a problem they have in terms they understand. To put it plainly: Obama wants Wall Street to believe that Obama believes that capital and markets are essential, that a command economy is not the goal. But Wall Street, although it invented the crisis also exported it globally to a willing market, a world-wide ambiance of hyper-greed, cannot respond to the crisis by itself. The federal government is the major player. Obama is faced with a situation in which the U.S. as the biggest player, with the acknowledged and expected leadership, cannot just do anything it wants to the perps on Wall Street. The U.S. has to model a solution. If a model here does not work in Poland or Latvia or Japan or Spain, then at least the model we engineer must be equipped with "plugs" the likes of which these countries can fashion from the wreckage of their own economies. This is the crucial problem. The U.S. now must play the leadership role without guns and bombs and public lynchings, and quite frankly the population after eight years of the opposite and a preceding century of rampant irresponsibility all over the planet just does not quite get it yet. Don't get me wrong. I think Tim Geithner is perhaps the last person we want as Treasury Secretary next year. I think that Obama does need a Geithner type on board right now, but when it comes to reform-legislation-Geithner has no cards, no chips, and has his green visor on backwards. Obama is smart enough to know that his cabinet must roll with the times, that it must evolve. Some among them might be able to morph into what we need down the road, but certainly not all. JB