Larry Ribstein sees the President and the Democrats turning even more to a populist anti-Wall Street emphasis in the wake of their loss in Massachusetts:
The accepted wisdom is that much of the Obama agenda is now in peril, including financial regulation. But don't bet on having seen the last of it, particularly the bank tax. ...
The bank tax has the political "virtue" of simultaneously tarring the banks and showing that the Democrats are "doing something" about it.
There are several layers of rich irony here. First, the public is mad because of the Obama administration's stupid decision to waste billions of unnecessary and much needed government cash on bailouts, as I've detailed from the beginning in my "dismantling capitalism" archive.
Second, the bank tax is counterproductive. In commenting on this stupid tax I noted John Carney's criticism that "handing out the TARP money and then levying a punitive tax is a bit like throwing a steak on the floor and then beating the dog when he eats it."
Third, and more broadly, although the tax is intended to divert blame and attention from the real problems causing voter angst, it actually contributes to these problems by increasing the deadening climate of uncertainty that hangs over business. ...
As I discussed recently, there's a strong argument that the uncertainty connected with a massive government takeover has contributed a lot to the joblessness of the recovery. How can firms expand when they don't know which limb the government is going to lop off next? Indeed, it's at least a reasonable guess that the market's gain yesterday was not just about health care, but about a hope that the government cloud will lift after the Democrats lose the 60th seat. Unfortunately, this hope may be premature.
The Republicans' response to all this should be clear. Don't give into the Democrats' political games just because populism seems right now to be popular, as Erik Gerding argued yesterday.
