Call it a tale of two presidents. When Barack Obama was first elected President, the nation was truly in crisis, mired in an economic crisis unequaled since the Great Depression. The enthusiasm and hope greeting his election was compared by many to that which greeted Franklin Delano Roosevelt upon his ascension. Indeed, right after his election, Obama was featured on the cover of Time Magazine fashioned to look like FDR in his 1930s-era convertible.
The comparison seemed apt. After all, in 1932, FDR seemed to be coming to the rescue of a nation seemingly coming apart. Roosevelt took radical steps, implementing the New Deal which included not only short-term stimulus to get the economy moving again, but long-term interventions that would forever after change the relationship Americans have with government. Roosevelt’s approach was so radical that some have called him a “traitor to his class,” since he pursued this radical pro-worker agenda despite his privileged background.
But there is another take on Roosevelt’s policies. At the time, there were growing movements on the left and the right offering answers to desperate Americans. On the left were the Marxists, on the right, Fascists. Roosevelt’s aggressive intervention, combined with his talent at communicating his agenda of hope cut these movements off at their knees. There was no need for radical steps since the system had worked — the United States took care of its citizens and acted justly. Roosevelt’s action led to the ascendency of the American center for over sixty years.
Contrast that with what happened with Obama’s Presidency. There was a critical moment in President Obama’s first term where he met with thirteen of the most powerful bankers in the country. These were the very people most responsible for the financial mess that engulfed the country at the time. These were the same people who were foreclosing on millions of homes, and whose irresponsible behavior destroyed the wealth of tens of millions of homeowners. Remember, for most people, most of their wealth is tied up in their home. Destroying the value of someone’s home is, for most people, tantamount to destroying their net worth.
In the meeting, as reported by Simon Johnson and James Kwak in their book 13 Bankers, the bankers expected to pay a serious price for their risky behavior. This impression was at first reinforced by the President sternly taking them to task for creating this crisis. But then, Obama changed his tone, suggesting that they all needed to work together. Rather than forcing the bankers to make concessions, perhaps making some of the most culpable resign, he ordered them to accept cheap financing from the federal government at the same time as they were foreclosing on millions of taxpayers. The President demanded nothing substantive from them in return. There was no bail-out for the homeowners, the middle-class families who bore the brunt of this crisis.
This meeting set the tone for his administration’s dealing with the bankers. When he was first elected, America’s banking system was on its knees. The President could have demanded virtually anything in return for the bank bailout. Instead, he demanded virtually nothing, allowing the bankers to prosper and feed on the misfortune of millions of investors and homeowners. Under the President’s plan, average people lost their homes and their jobs, or feared that happening to them. Rich bankers did better than ever.
Something about this arrangement struck most Americans as profoundly unfair. Where we expected the President to use the system to our benefit, it seemed instead skewed to benefit those at the top.
The center never recovered. From that moment on, increasing numbers of people who believed in the system for years felt betrayed. No longer did the establishment take care of average Americans. Instead, it seemed to be nothing more than an out-of-touch swamp.
President Obama was cautious, fearing that drastic steps would hurt the financial system worse than it was already hurting. He is a decent man who worked hard to bring stability in a time of chaos. But where FDR’s radicalism ultimately restored faith in the establishment, Obama’s caution added fuel to the fire of radical movements. For years we enjoyed the stability born of FDR’s radical steps. Now, we must live with the division and extremism resulting from Obama’s failure to act boldly.
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