David Sirota asks this question. If Wagoner from GM gets the axe from Obama why not the bankers?
Simple answer really.
Marx had it all wrong when he put “capital” in one bag. The truth is that “capital” should really be thought of as “capitals” that sometimes cooperate but often compete with one another for state resources. Manufacturers create capital (or at least created capital) off of tangible products. Refined steel. Cars. Financiers create capital off of financial services (recently retagged as “products”). Guess who won out in the eighties?
The financial industry has not always enjoyed such favored treatment. But for the past 25 years or so, finance has boomed, becoming ever more powerful. The boom began with the Reagan years, and it only gained strength with the deregulatory policies of the Clinton and George W. Bush administrations. Several other factors helped fuel the financial industry’s ascent. Paul Volcker’s monetary policy in the 1980s, and the increased volatility in interest rates that accompanied it, made bond trading much more lucrative. The invention of securitization, interest-rate swaps, and credit-default swaps greatly increased the volume of transactions that bankers could make money on. And an aging and increasingly wealthy population invested more and more money in securities, helped by the invention of the IRA and the 401(k) plan. Together, these developments vastly increased the profit opportunities in financial services.
What Simon Johnson calls the quiet coup is nothing more than the spread of neoliberal governmentality. I remember reading in the NYT–if someone has a cite please let me know–about the War on Iraq during the Bush administration. An “unnamed official” noted that the Bush administration was in the business of “creating reality”. By the time the journalists caught up with the reality they’d created, they’d already moved on, creating another reality in so doing. I thought that what they did was pretty audacious.
But what the Wall street financiers did was something else. They cloaked a multi-level marketing scheme in the logic of market principles and high-order mathematics. By the time that people figured out what had happened…well here we are right?
The reason why Obama could pull the trigger on Wagoner, but not on the bankers, is simple. Wagoner represents the equivalent of a welfare queen. It’s relatively easy to diagnose the ills that the automotive companies are wrestling with, and relatively easy to point to cultural failures. Because the bankers are still intimately connected with the market, there’s still a sense that they are the only ones with the tools to diagnose and correct the problem. They’ve taken the bureaucracy designed to oversee and regulate them hostage.