So yesterday's post on Matt Taibbi's latest in Rolling Stone got a bit more attention than I had anticipated, including a response from Felix Salmon that I thought was worth addressing. Salmon defends Taibbi -- I'd accuse him of some logrolling in our time thanks to his appearance in the piece, but Salmon is better than that -- but it's not a very strong defense. Just to be clear, I don't object to Taibbi's polemic style, or his name-calling, or his lack of fealty to J-school convention. I don't expect everybody to be familiar with my writing, but if Salmon bothered to read any of my posts about the media, he'd realize that's the last thing I'm worried about. None of my various quibbles with Taibbi's piece had to do with his style.
Here's my point: Taibbi has written an article arguing that Obama has sold out his campaign-era economic populism by surrounding himself with Bob Rubin's lackeys and giving away the farm to the bankers -- "one of the most dramatic political about-faces in our history." Only it turns out, though, that many of the Rubinites he identifies don't work on the things he says they work on, or don't take the positions he applies to them, or aren't as influential as he thinks they are. The people he says were "banished" from Obama's inner circle, like Austan Goolsbee, weren't. He manages not to mention any of the populist decisions Obama has made. These things ought to raise questions.
To deal with the two examples that Salmon questioned, on the issue of Michael Froman's role in the transition, I never say that the article doesn't identify him properly. I'm just pointing out that if Taibbi's writing an article about how these shadowy figures are undermining the bailouts and financial regulation, focusing on someone who doesn't work on the bailout or financial regulation is a weird way to go about it, unless you're just trying to identify everyone with a connection to Bob Rubin and use vague innuendo to suggest they've done something shadowy. Taibbi also claims that Froman "hired" Treasury Secretary Tim Geithner, which just isn't true. Nor is it true that Froman and James S. Rubin were "running" Obama's transition economics team; they also weren't involved with the November 2008 decision to bail out Citi. On the issue of Elizabeth Warren and the CFPA inspection exemption, if you look at the interview, she specifically says that the version of the CFPA that came out of Frank's committee is strong. That's the version of the legislation with the exemption.
It is very telling that Taibbi never mentions the massive lobbying efforts by the financial sector to kill the regulatory reform legislation that the administration supports -- if the banks are trying to stop the bill that is supposedly so bank-friendly, suddenly the narrative can't be a morality play. It makes for a more complicated story, but that's the story that needs to be told. It also says something that Taibbi never mentions the Chrsyler and General Motors rescues, where the Obama administration spent billions of dollars from the TARP fund for the express purpose of saving hundreds of thousands of jobs. Pretty populist, I'd say.
Salmon says I concede that Taibbi is right when I note there are real problems with the Wall Street-Washington revolving door and that the administration isn't hard enough on the banks. I think that's just conceding reality. Taibbi's interpretation of that problem -- that the administration "proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside" -- doesn't reflect reality. Salmon suggests I'm not supposed to take this "literally," but if that's Taibbi's intent, I'd say that's pretty weak sauce. And I wasn't saying that Taibbi's story would "overshadow" all other criticisms from the left, I said it would be used to dismiss them. That's how politics works.
In other news, yesterday the House passed an omnibus financial regulatory reform bill over the objections of Republicans and the financial industry. Is it perfect? Far from it, especially in the derivatives area. But it does have the version of the Consumer Financial Protection Agency that Warren says is strong, it gives federal regulators dissolution authorities that, if used properly, ought to prevent future bailouts. Federal regulators will be able to split up banks that get too risky, institute higher capital requirements and limit leverage. It's a step in the right direction in an effort that will require many steps. I wonder if Taibbi's readers will hear about it.
Update: Also Matt Yglesias makes a good point about Congress' role in all this.
-- Tim Fernholz
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