Today, President Obama is meeting with the heads of Wall Street banks to talk about financial reform. I'm not sure why. A few articles out there list several potential topics of discussion. I'm still not sure I see the point. With Citigroup's announcement today of its bailout repayment, the president has precisely zero control over Wall Street. The fact is that bankers almost certainly don't care much about what Obama has to say.
What are some of those potential subjects that the president wishes to discuss? Let's defer to the Associated Press:
Specifically: Wall Street should fall in line with Obama and back a proposal for a consumer protection agency that cleared the House last week.
Good luck with that. This is possibly the single most sensitive issue with banks. The last thing they want is Washington deciding which products they can sell to consumers. And Obama has no significant leverage on this one. Even though the creation of such an agency passed on Friday as part of the broader financial reform bill, as I noted, an amendment that would essentially kill the agency narrowly failed. There's a strong chance that the agency won't survive the Senate, where votes will be even more difficult to obtain from more moderate Democrats.
Another item on Obama's list: more lending. But AP reports:
"He can say what he wants, but we're not going to go back to the kind of lending that put us in this mess," said a person who is helping prepare executives for the meeting.
Again, the president has no leverage. Even the financial reform bill can do nothing to really get banks to lend more. And with all big banks on the verge of repaying the bailout, Obama has no further means with which to make these kinds of demands.
Could the president attempt to offer some compromise with Wall Street that he would work to water down the reform bill? He could, but Wall Street is smart enough to know that they don't need to compromise: whatever ends up getting through the Senate won't much hurt them anyway. And the president will also damage his credibility with the American public if he's seen making deals with Wall Street.
It's pretty clear that bankers are humoring the president by even discussing anything with him. As AP notes, the CEOs from Goldman Sachs, Morgan Stanley and Citigroup didn't even bother showing up -- they'll be involved via telephone. Those are three of the most significant banks in the country, and this statement shows just how little Wall Street is concerned with Washington's influence going forward. Its lobbyists wield more power over Congress than the president, so it has little to fear.
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