Obama’s Heavy Hand

It’s truly an amazing spectacle that’s currently playing out in Washington. A president many had already written off is cruising almost playfully and with a strong political wind in his sails toward the second big reform success of his still-young administration.

Just weeks after passage of the health care reform legislation he put through despite such fierce opposition, Obama now seems rejuvenated. In the debate over increased financial market regulation, he’s deftly outmaneuvering an opposition seemingly too weak to run.

This time, however, the Republicans have fallen into their own trap of opposing Obama at all costs. Their strategy that Obama’s failure is always to their advantage isn’t working.

As skeptical of government and its institutions as the American people may be, regardless of how low the public’s approval of the administration is and as unpopular as Washington has become, there’s still one place and one institution even more hated by the American people: Wall Street.

Those deep urban canyons of Wall Street have become synonymous with everything that’s wrong in the motherland of capitalism. The one-time demigods of high finance are now suspected of swindling homeowners, investors and taxpayers alike.

The idea that they were primarily to blame for causing the financial crisis then made big profits from it goes against every sense of justice, even in the United States. Many Americans view an expansion of government power under Obama with skepticism and, in many cases, with outright rejection. But in one area, a clear majority favors Washington’s heavy hand: in the restriction of Wall Street excesses. Sixty-one percent of those surveyed favor reforms that will, once and for all, put an end to the possibility of a repeat of the frightful economic crisis that followed the bursting of the real estate bubble two years ago.

The political dynamic in Washington was transformed by the collapse. Obama at first hesitated to get tough with Wall Street. He listened for too long a time to moderate voices like that of his own economic adviser, Larry Summers, who himself had advocated financial market deregulation during the 1990s.

The faction surrounding former Fed chief and Wall Street critic Paul Volcker finally gained the upper hand in the White House. Obama now enjoys the rare good luck that his policies are not only the right ones, but the public also embraces them.

In this instance, the Republicans were late in coming to the realization that trying to block financial market reform did them more harm than good. Nothing could be worse these days in U.S. politics than to be seen as favoring a very unpopular Wall Street.

In contrast to his handling of health care reform, Obama didn’t give his opponents enough time to put their spin on the subject for the public. When Republicans belatedly tried to interpret Obama’s reforms as a “huge bank bailout” and a Wall Street safety net, Obama stepped up his criticisms of the finance industry; the scandal of dubious business practices by mega-bank Goldman Sachs was the straw that finally broke the opposition’s back. The Republicans made a last-ditch attempt on Monday to impede debate of the legislation on the Senate floor. Behind the scenes, however, compromises were already flying thick and fast.