In Private, Obama Bows to the 'Fat Cats'

Critics cast doubt on his pledge to get tough with Wall Street

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In his Sunday interview on 60 Minutes, President Obama came down hard on Wall Street, saying, "I did not run for office to be helping out a bunch of fat-cat bankers." (See the Wire's clip of the broadcast here.) But as Citigroup and Wells Fargo begin repaying their TARP money, many worry that Washington may be missing its chance to impose meaningful financial reform. Was Obama's tough talk before the White House meeting with bankers merely bluster? Some of the biggest figures--Goldman Sachs CEO Lloyd Blankfein among them--were no-shows, apparently due to inclement weather. Here's how the left and right are attacking the president's stance:

  • Under the Spell of Bankers? Charles Gasparino at The New York Post says behind closed doors, Obama couldn't have been kinder to the bank execs--and there's a reason: "Maybe Obama's softened tone was recognition of Wall Street's election help. Campaign-finance filings show that firms like Goldman -- now getting ready to dish out $20 billion in bonuses after nearly imploding last year -- favored Obama over John McCain by a fairly wide margin. Nearly all the major Wall Street CEOs -- including Dimon, Blankfein and Mack -- have told people that they voted for Obama."
  • Right Tone, Wrong Policies, worries The New York Times editorial board: "Mr. Obama was right when he said the banks owe 'an extraordinary commitment' to taxpayers, and he got some promises to lend more. But that would have been more convincing if the administration had held the banks' feet to the fire in the first place and had not agreed so quickly to freeing them from the bailout restraints. The truth is that the taxpayers are still very much on the hook for a banking system that is shaping up to be much riskier than the one that led to disaster."
  • Wrong Tone, Wrong Policies, writes The Wall Street Journal editorial board: "The President is attempting a double populist play: Blame the bankers for causing the financial crisis and recession by lending too much, and blame them again for causing high joblessness now by lending too little... This blame-the-bankers rhetoric is worse than a distraction as the recovery tries to gain solid footing and become a durable expansion. It risks obscuring two critical and related problems: Federal policy is discouraging both lending and borrowing."
  • "All Hat, No Cattle," writes Marshall Auerback at Naked Capitalism: "It might feel satisfying to hear the President criticize 'reckless', 'fat cat' bankers, but the financial reform legislation passed by the House last Friday (and lauded by the President) provides little incentive to change their behavior. In reality, populism -- with nothing of substance behind it -- is just cynical posturing designed to mask genuine failure. To use an expression favored by his predecessor, this president is once again showing himself to be all hat, no cattle."
  • Washington Is Losing Its Grip, writes Andrew Ross Sorkin in The New York Times. He points to the absence of Lloyd Blankfein, John Mack and Richard Parsons (leaders of Goldman Sachs, Morgan Stanley and Citigroup) as a telltale sign: "Inevitably public perception will issue its harsh ruling, and it goes something like this: If the meeting were really that important to Mr. Blankfein, Mr. Mack and Mr. Parsons, they would have found a way to get there."
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