How Obama is selling the stimulus

Obama gave a big-speech today promoting his stimulus plan. It was short on detail—there’s much Congressional horse-trading to come—but there were two passages that stood out. The first was Obama’s diagnosis of what has caused this economic collapse:

“This crisis did not happen solely by some accident of history or normal turn of the business cycle, and we won’t get out of it by simply waiting for a better day to come, or relying on the worn-out dogmas of the past.  We arrived at this point due to an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, DC.  For years, too many Wall Street executives made imprudent and dangerous decisions, seeking profits with too little regard for risk, too little regulatory scrutiny, and too little accountability.  Banks made loans without concern for whether borrowers could repay them, and some borrowers took advantage of cheap credit to take on debt they couldn’t afford.  Politicians spent taxpayer money without wisdom or discipline, and too often focused on scoring political points instead of the problems they were sent here to solve.  The result has been a devastating loss of trust and confidence in our economy, our financial markets, and our government.”

The other passage that stood out to me was on regulation:

“it means reforming a weak and outdated regulatory system so that we can better withstand financial shocks and better protect consumers, investors, and businesses from the reckless greed and risk-taking that must never endanger our prosperity again.

No longer can we allow Wall Street wrongdoers to slip through regulatory cracks.  No longer can we allow special interests to put their thumbs on the economic scales.  No longer can we allow the unscrupulous lending and borrowing that leads only to destructive cycles of bubble and bust.” Bailing out the banks has hardly been popular with the voters and there’s more to come with another $350bn to be appropriated soon. Obama is, obviously, hoping to sweeten the pill with a public flogging of the fallen Masters of the Universe. Taken alongside the appointment of Obama’s friend and Harvard Law Professor Cass Sunstein to head the White House’s Office of Information and Regulatory Affairs Obama’s words suggests that there will be a major restructuring of the US regulatory system, a system that failed almost as badly as Britain’s during this crisis, early in his administration.