The Screwed Election: Wall Street Can’t Lose, and America Can’t Win


About two in three Americans do not think what’s good for Wall Street is good for America, according to the 2012 Harris poll, but do think people who work there are less “honest and moral than other people,” and don’t “deserve to make the kind of money they earn.” Confidence in banks is at a record low, according to Gallup, as they’ve suffered the steepest fall in esteem of any American institution over the past decade. And people have put their money where their mouth is, with $171 billion leaving the stock market last year alone, and 80 percent of Wall Street communications executives conceded that public perception of their firms was not good.

Americans are angry at the big-time bankers and brokers, and yet, far from a populist attack on crony capitalism, Wall Street is sitting pretty, looking ahead to a presidential election that it can’t possibly lose. They have bankrolled a nifty choice between President Obama, the largest beneficiary of financial-industry backing in history and Mitt Romney, one of their very own.

One is to the manner born, the other a crafty servant; neither will take on the power.

Think of this: despite taking office in the midst of a massive financial meltdown, Obama’s administration has not prosecuted a single heavy-hitter among those responsible for the financial crisis. To the contrary, he’s staffed his team with big bankers and their allies. Under the Bush-Obama bailouts the big financial institutions have feasted like pigs at the trough, with the six largest banks borrowing almost a half trillion dollars from uncle Ben Bernanke’s printing press. In 2013 the top four banks controlled more than 40 percent of the credit markets in the top 10 states—up by 10 percentage points from 2009 and roughly twice their share in 2000. Meantime, small banks, usually the ones serving Main Street businesses, have taken the hit along with the rest of us with more than 300 folding since the passage of Dodd-Frank, the industry-approved bill to “reform” the industry.

Yet past the occasional election-year bout of symbolic class warfare, the oligarchs have little to fear from an Obama victory.

“Too big to fail,” enshrined in the Dodd-Frank bill, enjoys the full and enthusiastic support of the administration. Obama’s financial tsar on the GM bailout, Steven Rattner, took to The New York Times to stress that Obamians see nothing systemically wrong with the banking system we have now, blaming the 2008 market meltdown on “old-fashioned poor management.”

“In a world of behemoth banks,” he explained to we mere mortals, “it is wrong to think we can shrink ours to a size that eliminates the ‘too big to fail’ problem without emasculating one of our most successful industries.”

But consider the messenger. Rattner, while denying wrongdoing, paid $6.2 million and accepted a two-year ban on associating with any investment adviser or broker-dealer to settle with the SEC over the agency’s claims that he had played a role in a pay-to-play scheme involving a $50,000 contribution to the now-jailed politician who controlled New York State’s $125 billion pension fund. He’s also expressed unlimited admiration for the Chinese economic system, the largest expression of crony capitalism in history. Expect Rattner to be on hand in September, when Democrats gather in Charlotte, the nation’s second-largest banking city, inside the Bank of America Stadium to formally nominate Obama for a second term.

In a sane world, one would expect Republicans to run against this consolidation of power, that has taxpayers propping up banks that invest vast amounts in backing the campaigns of the lawmakers who levy those taxes. The party would appeal to grassroots capitalists, investors, small banks and their customers who feel excluded from the Washington-sanctioned insiders' game. The popular appeal is there. The Tea Party, of course, began as a response against TARP.

Instead, the party nominated a Wall Street patrician, Mitt Romney, whose idea of populism seems to be donning a well-pressed pair of jeans and a work shirt.

Romney himself is so clueless as to be touting his strong fund-raising with big finance. His top contributors list reads something like a rogue’s gallery from the 2008 crash: Goldman Sachs, JPMorgan Chase, Morgan Stanley, Credit Suisse, Citicorp, and Barclays. If Obama’s Hollywood friends wanted to find a perfect candidate to play the role of out-of-touch-Wall Street grandee, they could do worse than casting Mitt.

With Romney to work with, David Axelrod’s dog could design the ads right now.

True, some of the finance titans who thought Obama nifty back in 2008 have had their delicate psyches ruffled by the president’s election-year attacks on the “one percent.” But the “progressives,” now tethered to Obama’s chain, are deluding themselves if they think the president’s neo-populist rancor means much of anything. They get to serve as what the Old Bosheviks would have called  “useful idiots,” pawns in the fight between one group of oligopolists and another.

This division can be seen in the financial community as well. For the most part Obama has maintained the loyalty of those financiers, like Rattner, who seek out pension funds to finance their business. Those who underwrite and speculate on public debt have reason to embrace Washington’s free spenders. They are also cozy to financiers like John Corzine, the former Goldman Sachs CEO and governor of New Jersey, whose now-disgraced investment company MF Global is represented by Attorney General Eric Holder’s old firm. 

The big-government wing of the financial elite remains firmly in Obama’s corner, as his bundlers (including Corzine) have already collected close to $20 million from financial interests for the president. Record support has also poured in from Silicon Valley, which has become ever more like a hip Wall Street west. Like its east-coast brethren, Silicon Valley has also increased its dependence on government policy, as well-connected venture capitalists and many in the tech community  have sought to enrich themselves on the administration’s “green” energy schemes.

Romney, on the other hand, has done very well with capital tied to the energy industry, and others who invest in the broad private sector, where government interventions are more often a complication than a means to a fast buck. His broad base of financial support reflects how relatively few businesses have benefited from the current regime.

Who loses in this battle of the oligarchs? Everyone who depends on the markets to accurately give information, and to provide fundamental services, like fairly priced credit.

And who wins? The politically well-situated, who can profit from credit and regulatory policies whether those are implemented by  Republicans or Democrats.

American democracy and the prosperity needed to sustain it are both diminished when Wall Street, the great engineer of the 2008 crash, is all but assured of victory in November.

Joel Kotkin is executive editor of and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

This piece originally appeared in The Daily Beast.

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There is a difference

Obama, as your article clearly demonstrates, firmly believes in crony capitalism. He gives money (your money, my money) to his friends and his ideas. Then he wants more of your money. Then he ruins other ideas to make a business (EPA rules) either targeted at his enemies (coal, oil) or just in general (lemonaid stands) (OK Obama hasn't closed any lemonaid stands, but those who have, are all progressives, and Obama's BFFs.) Note that all the socialist/communist nations have failed. Most of the people alive in 2000 lived in a communist country that is now no longer communist.
Romney, believes in capitalism. He believes everyone should have a chance to make money, not just his friends. He believes that when the government picks winners and losers, America loses. Note that before capitalism, life for most people in the world was an annual struggle against starvation.
I believe it is a stark difference. You spend so much of your article saying how bad Obama is, then in a paragraph toss off Romney with a "and he was born into it" This is the worst of Marxist claptrap. You write such intellegent looking stuff, which in the end is a condemnation of progressive politics but end with a 'but they do it to' left completely without supporting evidence. I would say that if you tried, you could do better, but really, if you were objective, you could do better.

Romney, The Banks, And Capitalism.

Outsourcing works... and it also doesn't. There's no way around it, the 10's of millions of domestic jobs and wealth that have been created since the 60's because of outsourcing was great, we've seen our standard of living fly through the roof since the Reagan years, but outsourcing as an end is not necessarily a good or even a sustainable route if it is prescribed to with the same faith that anti-tax or soak-the-rich absolutists throw behind their economic convictions.

It has to be done with the full understanding of the tradeoffs & what we loose in the process. When Romney finally defines the version of capitalism he is for, I hope he articulates this, & champions both some continuation of the old model, while also encouraging a export-driven model, the benefits of buying local, & letting people know the communal and civic benefits of keeping jobs in America if we can afford it.

Also, there is a conservative case for breaking up the banks. Romney should take the lead on this with what little ability he has left to frame any argument.

The problem still is Washington DC,

The main problem is Washington DC. Wall Street is a symptom of that serious problem. The large and growing federal government enables the crooks on Wall Street to do what they do. The only reason nobody gets jailed is that the "bribes" aren't unlawful (yet).

Wall Street should be the symbol of the private free enterprise system. However these days its has become an arm of the federal government. Unfortunately the corrupt part of the federal government. If the federal government hadn't overgrown they wouldn't be able to be bribed. There are reasons why some of us want small government and this is one of the reasons why. You can't bribe what doesn't exist. This is not a failure of the free enterprise system, but the cronyism that comes with a big government. There is little free enterprise on Wall Street today, and that is its problem.

These banks have grown to be so big largely due to how the federal government has regulated (and over-regulated) them. The money gets passed around and the regulations are written to favor those banks. That has to be stopped. Rules should be few and simple to prevent fraud, unfair monopolies and the like, not how businesses are run. Few clear rules with clear penalities, outside of that should be nobodies business. Rules favoring one business over another should be illegal. There should be no rules with one company in mind.

I bet the numbers on the confidence of people in the federal government are equally low if not lower.

There is nothing wrong with the private free enterprise system if it is truly that. Today's Wall Street is not an example of that system and that is why we have the problems with it today.

Welcome to the Plutocracy

Welcome to living in a plutocracy my friends. The America I grew up with a strong, thriving, politically powerful, middle class in is dead, dead, dead. America has morphed from being the land of free and the home of the brave into the land of the fee and home of the wage slaves to the plutocrat class.

Let's have a moment of silence to mourn the passing of what Lincoln referred to as "The last best hope of Earth" because we have meanly lost the proposition as he put it, that "all men are created equal". Now all that matters is how much money you have or were born with. "Justice" is for sale and only to the Wall Street plutocrats.

I believe Ben Franklin when asked what form of government we had after the signing of the Constitution replied, "A Republic Madam, if we can keep it.". Well old Ben Franklin must be rolling over in his grave now because America is no longer a Republic of free equal citizens.

Like the pigs from George Orwell's novel "Animal Farm" it seems that the Wall Street plutocrats are more "equal" than anyone else and completely unaccountable. It's ironic though since Animal Farm was a devastatingly accurate critique of Communism.

Yet Communism's seeming opposite, unregulated Capitalism, has brought us to the same exactly to the same place. A few very rich, very powerful, and who are utterly above the law, a politically impotent and shrinking middle class who is having what wealth they have transferred to the very rich, and many, many poor. America has become utterly corrupt and a pox on the Republicans and the Democrats since they are both to blame.

Americans Are Angry

If you want a longer, impassioned treatment of this issue and its implications check out U.S. Senator Bernie Sanders' blazing speech at this URL.

election 2012

Do dirty negative ads always win? Seems they are giving Mr. Obama a huge boost. But is that the way it should be?

I believe Mitt should come out swinging. 4 more of Mr. O and America will be gone!