Finance industry is to politics like rust is to cars: Tough to get rid of

Obama for America — A television ad paid for by Obama for America attacked the private equity firm Bain Capital, which was founded by Mitt Romney.


Political Dividends

By THOMAS B. EDSALL, NYT

Four years after the 2008 collapse, the finance industry has regained its dominant position in American politics. Perhaps the development of deepest significance is an absence: the failure of a powerful anti-Wall Street faction to emerge in either the House or the Senate. This is in contrast to the response to previous financial crises, when Congress enacted tough legislation — after the Savings and Loan implosion of the 1980s, for example, and more recently after the bankruptcy of Enron and WorldCom in the early 2000s.

Look at the current political environment this way: if Mitt Romney’s campaign and the Romney-supporting super PAC Restore Our Future were a public company, the financial services industry would have a controlling interest.

President Obama, in turn, has been noticeably cautious in his critique of Wall Street, trying instead to focus on Romney’s former company, Bain Capital. Obama’s ambivalence about speaking out is a tacit victory for the industry.

The financial collapse did seriously damage the credibility of the industry’s central claim: that economic growth results from a deregulated free market, a view that dominated policy-making in the 1980s and 1990s. Simon Johnson, a professor at M.I.T. who was the chief economist at the International Monetary Fund in 2007 and 2008, masterfully described this earlier intellectual capture of political elites in his May, 2009, Atlantic article, “The Quiet Coup:”

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