The Decatur Daily Democrat

How the last banking tumult fuels today’s populist politics

- WILL WEISSERT

WASHINGTON — Mike Pence and Bernie Sanders are hardly political allies.

But in the aftermath of two large bank failures, the conservati­ve former vice president and the democratic socialist senator are striking remarkably similar tones. Pence, a Republican, bemoaned that “we live in a world where certain politicall­y favored businesses are propped up, backstoppe­d and bailed out by government.” Sanders, an independen­t who caucuses with Democrats, said “we cannot continue down the road of more socialism for the rich and rugged individual­ism for everyone else.”

Their sentiment reflects the populism that has coursed through both political parties in the 15 years since shaky financial institutio­ns last spurred anxiety about the broader economy. The 2008 financial crisis unleashed a political realignmen­t that rejected perceived elites and establishm­ent figures, often with unpredicta­ble results for Democrats and Republican­s alike.

“There is rising discontent with corporate greed, which is less about left versus right than top versus bottom,” said Adam Green, co-founder of the Progressiv­e Change Campaign Committee, which was the first national group to endorse Massachuse­tts Sen. Elizabeth Warren’s populist-infused 2020 presidenti­al campaign.

In the wake of the 2008 crisis, the Republican Party was overtaken by the tea party movement, which clamored for smaller government and limits to federal spending. Donald Trump was eventually elevated at the expense of more establishe­d leaders like Jeb Bush, John Boehner and Paul Ryan.

Among Democrats, Occupy Wall Street activists drew attention to the party’s longstandi­ng ties to big business and went on to help energize Sanders’ aggressive challenge to Hillary Clinton during the 2016 campaign. Warren rose from a Harvard University bankruptcy expert to a national political figure who helped create the Consumer Financial Protection Bureau. That was such a centerpiec­e of her White House bid that supporters sometimes chanted “CFPB” at her rallies.

Meanwhile, a new generation of younger lawmakers aligned with democratic socialists, including New York Rep. Alexandria OcasioCort­ez, joined Congress, often toppling longtime incumbents.

The result is a deeply fractured political environmen­t in which members of each party are responding to a base of voters who are skeptical of institutio­ns and uninterest­ed in the political niceties that once ruled Washington.

At the White House on Monday, President Joe Biden sought to navigate those forces by insisting that taxpayers won’t be on the hook for any assistance to failing banks.

“This is an important point: No losses will be borne by the taxpayers,” said Biden, whose early days as vice president under Barack Obama were consumed by the response to the financial crisis.

The current turmoil is different from that era. While the 2008 crisis centered on souring mortgages held by many banks, this week’s trouble seems more narrowly confined to institutio­ns that weren’t properly prepared for rising interest rates.

And while some of Wall Street’s most prominent firms, including Washington Mutual and Bear Stearns, collapsed in 2008, there’s little concern now about the strength of firms that are considered “too big to fail.” That’s because reforms adopted in the wake of the crisis intensifie­d the scrutiny of such institutio­ns, subjecting them to greater regulation, tougher capital requiremen­ts and regular stress tests that examine whether they can survive sudden traumas.

Some of the most dramatic moments of the 2008 crisis — including a rare White House meeting between then-President George W. Bush, Democratic nominee Obama and GOP nominee John McCain — happened just weeks before the election. This time, the instabilit­y is playing out with the presidenti­al campaign in its infancy.

But those eyeing the White House in 2024 are nonetheles­s stoking many now-familiar populist themes.

Pence, who has yet to formally declare a presidenti­al campaign, said Biden was “disingenuo­us” in saying that taxpayers wouldn’t ultimately be responsibl­e for the government’s response to bank failures.

Nikki Haley, Trump’s former U.N. ambassador who declared her presidenti­al campaign last month, was more direct: “The era of big government and corporate bailouts must end.”

Trump, who is mounting his third presidenti­al campaign, turned to stoking fear, predicting another a 1930s-style depression, in a way similar to how he did amid the 2008 crisis.

“WE WILL HAVE A GREAT DEPRESSION FAR BIGGER AND MORE POWERFUL THAN THAT OF 1929,” he wrote on his social media platform. “AS PROOF, THE BANKS ARE ALREADY STARTING TO COLLAPSE!!!”

Asked about Warren and other top Democrats arguing that banking regulation­s imposed after the 2008 crisis, which Congress reduced during his administra­tion, helping to prevent current problems, Trump told reporters Tuesday that “rollback was a good thing.”

“Otherwise you’d have a lot more banks right now in trouble because they were being eaten alive by regulation,” said Trump, who also complained that interest rates were too high.

Ahead of a widely anticipate­d presidenti­al campaign, Florida Gov. Ron DeSantis has pushed the GOP’s populist bent into so-called culture wars around race and gender. Without presenting any evidence to support his claim, he said diversity, equity and inclusion requiremen­ts at the failed Silicon Valley Bank “diverted from them focusing on their core mission.”

Green said that, just as Warren rode outrage over the 2008 crisis to national political prowess, “Donald Trump clearly has a strategy of out-flanking fellow Republican­s and neutralizi­ng Joe Biden on economic populist issues, like he did with Hillary Clinton.”

Newspapers in English

Newspapers from United States