The Washington Post Runs Front Page Editorial Against Bank Tax and For Bernanke

The second paragraph of a front page Washington Post article tells readers:

"Now, an aggressive stance against the bankers, financiers and even government officials popularly blamed for causing the crisis is gaining political momentum, and there are signs it is eroding the very financial stability the government championed."

This statement is misleading in several ways. First the article presents no real evidence that financial stability is being eroded. It discusses the drop in share prices in recent days. This has as much to do with financial stability as the score of the weekend's football games. The market fluctuates all the time without in any way jeopardizing the financial stability of the economy.

Equating financial stability with the stock market's performance is incredibly irresponsible. It implies that anything that might hurt the profitability of any important sector of corporate America, for example a public option in the health insurance industry, could undermine the financial system. This is absurd on its face, although getting the public to believe this view would be in the interest of major corporations.

The statement is also misleading in describing President Obama's new stance towards the banks as "aggressive." This is not clear. Specifically, it is not clear that either his proposed bank tax will have a substantial impact on their profits and bonuses (it is equal to about 5 percent of combined profits and bonuses at the large banks) nor that his "Volcker Rule" will require them to substantially alter their business practices.

Clearly these moves are designed to appear to be aggressive. Whether or not they actually are would require a careful assessment of their impact, which does not appear in this article.

Finally, the article notes that: "bankers, financiers and even government officials" are "popularly blamed for causing the crisis." Is there anyone who questions that banks, financiers, and even government officials are in fact responsible for the crisis? This would be like saying "Al Queda, which is popularly blamed for the September 11th attack." The statement is true, but it is misleading by implying that this is just a matter of belief as opposed to a true statement.

The article also refers to the steps Bernanke took to "guide the economy through the worst crisis since the Great Depression." It would have been worth noting that, along with Alan Greenspan, he is the person most responsible for the crisis.

The article presented the views of 6 people associated with the financial industry, two senators declaring their support for Ben Bernanke, and Larry Summers, the head of President Obama's National Economic Council. It would have been useful to also include the views of those critical of Bernanke and the financial industry.

--Dean Baker

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