On the left, of course, the response to this will be John McEnroe–esque: You cannot be serious! Beyond the reflexive, ridiculous howling in certain quarters of the blogosphere—the J’accuses that Rubin is still working his will through a network of slavish moles within the administration for example—there is a credible argument advanced by serious critics such as Johnson and economist Nouriel Roubini that the Obamans have now missed two once-a-century opportunities for a root-and-branch reformation of a financial system that remains as dangerously unstable as ever. Calling the Dodd bill’s fixes “cosmetic,” Roubini said the other day, “There is a risk of ending up in another crisis, as the world found itself in the Depression in 1933.”
Whatever the effects of the bill, among them will be neither an end to the too-big-too-fail doctrine nor any curb on what the sharpest Wall Streeters see as the central threat to the system’s stability: excessive financial leverage. Geithner, Summers, and Obama had little interest in tackling those matters, not because they are indentured servants to Wall Street but because at heart they are all technocrats who believe the system doesn’t need to be rebooted or downsized, merely better supervised.
There are those who reckon that, what with the wailing and gnashing among both the plutocrats and the populists, Obama has actually found the political sweet spot. “Main Street is mad at the president because he’s too close to Wall Street, and Wall Street is mad at him because he’s too populist,” Altman says. “Therefore, almost by definition, he’s in the right place.”
Yet the political and financial implications of the rift between Obama and Wall Street may be significant. Already, Goldman, JPMorgan, UBS, and many other financial-services firms are shifting their contributions toward the GOP. Not long ago, a big-time Obama Wall Street fund-raiser asked his go-to guy at one of the megabanks that had lavishly supported the candidate in 2008 what level of donations the president might expect from the firm’s people in 2012. The answer was less than a tenth of the previous total. When the fund-raiser conveyed this fact—which he deems “astonishing”—to one of Obama’s political operatives, he was told, “You don’t have to worry. Money is never going to be a problem for Obama.”
“The truth is,” the fund-raiser says, “he may or may not be right. Meaning, you can imagine Obama might get enough of the energy back, but he might not. There’s a risk factor there. To be that casual and dismissive about it, you know, I think that captures a part of it where there is a certain arrogance of power—like, ‘We can do it without them.’ Well, it might be that you can do it without them, but it’s a dangerous way of thinking.”
But Wall Street, too, is engaged in some seriously perilous (and mildly deranged) thinking, which reflects not just its political naïveté but its all-distorting insularity from … reality. The populism now stirring in America is bipartisan, ecumenical. No politician of any stripe can afford to ignore it. The Republicans running in 2012 will be contending with or catering to it, too; they’re unlikely to offer Wall Street any safer harbor than Obama has. Yet the best barricade against the pitchfork platoons is an improving economy. And if it comes, not only will Obama stand a good chance of reelection, Wall Street’s amnesia may well kick in—just in time to fall in love all over again.