AIG could trip up Obama

Anger at bonuses is a hot potato

From: News & Observer – March 16, 2009
Adam Nagourney - The New York Times
Published: Mon, Mar. 16, 2009 12:30AM

http://www.newsobserver.com/politics/story/1444602.html

WASHINGTON -- The Obama administration is increasingly concerned about a populist backlash against banks and Wall Street, worried that anger at financial institutions could also end up being directed at Congress and the White House and complicate President Barack Obama's agenda.

The administration's sharp rebuke of American International Group on Sunday for handing out $165 million in executive bonuses -- Lawrence H. Summers, director of the president's National Economic Council, described it as "outrageous" on ABC's "This Week" -- marks the latest effort by the White House to distance itself from abuses that could feed potentially disruptive public anger.

"We've got enormous problems that need to be addressed," David Axelrod, Obama's senior adviser, said in an interview. "And it's hard to address because there's a lot of anger about the irresponsibility that led us to this point."
"This has been welling up for a long time," he said.

Obama's aides said any surge of such a sentiment could complicate efforts to win congressional approval for the additional bailout packages that Obama has signaled would be necessary to stabilize the banking system. As it is, there have already been moves in Congress to limit compensation to executives at banks and Wall Street firms that are getting government help to survive.

Beyond that, this shifting mood poses a significant challenge to Obama's political skills as he seeks to acknowledge the anger without becoming the target of it.
As Summers was denouncing AIG for the bonuses, he suggested there was little if anything the government could do to stop them, seconding the conclusion of Treasury Secretary Timothy F. Geithner. But even if their reasoning was legally sound, they also risked having the administration look ineffectual.

"Never underestimate the capacity of angry populism in times of economic stress," said Robert Reich, a professor of public policy at the University of California, Berkeley, who was labor secretary under President Bill Clinton. "A big challenge for President Obama will be to maintain a rational and tactical public discussion in the midst of this severe downturn. The desire for culprits at time like this is strong."


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oyharward wrote on March, 16 8:14 AM:

If you take a pig, place it within an enormous grass pasture for food, without a nose ring, the pig will not only eat the grass; the pig will dig and/or root up the grass, wanting more. Many on Wall Street, some in the banking industry, and a few on Capitol Hill, wants not only an honest and ethical living, but some want what they can manipulate, misappropriate, and/or steal to and for their own advantage, at taxpayers expense.