If you think we’ve finally come to the end of bailout politics, think again. This is not even the beginning of the end. It’s just the end of the beginning.
Throughout the financial crisis, our private sector and public sector leaders have displayed a tin ear for politics. They’ve demanded bailouts, demanded we call the bailouts “rescues,” told us to listen to the experts, attempted to disguise recapitalizations as investment or asset purchases and all along displayed a kind of haughty lack of contrition that would be stunning if it weren’t so ubiquitous.
While the panic has pacified the public into compliance, that attitude will be short lived. When the next round of profits roll in for financial institutions and millions in bonuses are doled out, people may well remember that they made this possible. The costs were spread wide across the amber fields of grain and purple mountains, while much of the concentrated benefits will gather in glass and steel towers in Manhattan. Even if government revenues grow as a result of all this, any benefits to taxpayers will be diffuse and indirect if not entirely illusionary.
Dennis Berman’s latest column in the Wall Street Journal shows that those who still fancy themselves the titans of Wall Street seem to be oblivious to the threat of the backlash. Even when they perceive it, they regard it as irrational humbug. It’s entitlement of the affluent run amok.
You would have thought the Street’s last surviving chieftains would be a contrite bunch by now, eager to reform their industry and help rebuild their country.
At least until you heard Goldman Sachs Group Inc.’s Lloyd Blankfein, J.P. Morgan Chase & Co.’s James Dimon, Blackstone Group LP’s Stephen Schwarzman, BlackRock Inc.’s Larry Fink and Silver Lake’s Glenn Hutchins assemble for a panel session at the New York Stock Exchange last week organised in part by The Wall Street Journal.
To the 75 Wall Street titans there nodding in agreement, the discussion must have seemed banal. But any outsider, from Washington or the dismissed realms of “flyover country,” would have been amazed at the goings-on.
While America buckles in for years of sacrifice, the five chiefs took a different approach. The group pulled straight from the what-government-can-do-for-you school of 2006, lobbying for Wall Street tax breaks, the repeal of Sarbanes-Oxley and against the distraction of class-action lawsuits.
Some of this may be sensible. But in light of a bailout already approaching $1 trillion — including direct taxpayer injections into bank shares — it also seemed politically suicidal.
Consider Blackstone’s Mr. Schwarzman, who took on a wounded look, saying that none of the people on the panel had done anything wrong. “I don’t see corruption in this room. … Every bad actor in this drama has washed away,” he said. “There’s no one left in place.”
Corruption, of course, is in the eye of the beholder. And it won’t be Schwarzman’s eyes who will matter the political backlash gets rolling. Those who can get themselves on the right side of the populist backlash stand to benefit. Those who bet against may do so at their own peril.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.