Speaking on Wall Street at noon Monday, President Obama laid blame for the crisis and recession of 2008-09 squarely at the feet of the financial sector. The diagnosis was sound but the rest of his speech was disappointing – the administration’s draft regulatory reforms look lame, banks are fully mobilized against the only proposal with any teeth (a consumer protection agency for financial products), and the President’s call to “please don’t do it again” surely fell on deaf ears.
In fact, were any of the most relevant ears even listening? The real news from Monday was not the substance of the speech or the stony silence of the financial elite in the audience, but rather that not a single chief executive officer (CEO) of a major bank was in attendance.
This is striking because CEOs were the natural and repeated point of contact for the President and his staff throughout the crisis – as seen, for example, at the pivotal White House meeting in March. This makes sense, because it was the CEOs whose jobs and reputations were on the line – people like Lloyd Blankfein (Goldman Sachs), Kenneth Lewis (Bank of America), Jamie Dimon (JP Morgan Chase), and John Mack (Morgan Stanley). And these same CEOs are today the key decision makers for everything the President wants to urge: careful risk management, responsible compensation schemes, and improved business ethics.
These CEOs are, of course, busy people and no doubt many or all had good excuses and sent nice apology notes. But their collective absence is beyond remarkable. The President saved their jobs, bonuses, pensions and much more after he came in office; this was a gutsy call on his part and one that may still sully his legacy. And in this endeavor, the President represented both the Congress of the United States – for example, in deciding how to implement the Troubled Assets Relief Program (TARP) – as well as all taxpayers and every citizen. Usually, you have to stand in line for a long time to sit in the same room as the President of the United States.
But not a single big bank CEO apparently had the time to show a little respect or gratitude, and to pay even lip service to better behavior in the future?
More than any technical discussion of raising capital standards or tightening leverage ratios, this presumably uncoordinated failure to show up speaks volumes about current attitudes on Wall Street. The CEOs of our biggest banks have weighed the man and done the trade. They have no more use for this President, no fear for what he can do to them, and see no reason to show support. They have moved on – presumably back to whatever they were doing before the events of September 2008 so rudely interrupted. And their obvious presumption, contrary to the words and body language of the President on Monday, is that next time – when they need it – the representative of the taxpayer will be there for them again, with generous bailout packages and extraordinary kindness.
By Simon Johnson
This is a slightly edited version of a post that originally appeared on the NYT’s Economix, and it is used here with permission. If you would like to reproduce the entire post, please contact the NYT. Short quotes may be used under the usual fair use rules.