Today's Wall Street Journal has a long piece about the gradual thaw in relations between Wall Street and the administration. Josh Marshall expresses amazement in response--presumably at the idea that Obama would cozy up to the people who inflicted so much damage on the economy in the first place. (Clay also had some interesting thoughts at The Plank.) [Update: Actually, Josh takes issue with the piece's assumption that Wall Street has the upper hand in the relationship and forced Obama to walk back his criticism. Apologies for the confusion.]
I guess I don't find the idea quite so outrageous--there's just a certain amount of buy-in any administration needs from financial markets, and a certain amount of knowledge that resides there. Having said that, you've obviously got to be vigilant about resisting self-serving arguments (which are legion in times like this--actually any time), and to stay committed to structural reform, both of which get harder the more conversations you have with insiders, or at least a certain type of insider.
That question aside, the piece felt slightly off to me. The administration obviously made a big marketing push in the run-up to releasing its new bank plan. But it's just not true that it froze out finance types early on. I talked to several money-managers for a piece I did about the bank situation last month, and many told me they'd talked it over with administration officials. To wit:
Whatever the details [of nationalization], Geithner and his colleagues are said to be deeply uncomfortable with the idea in principle. "Most people who run businesses in this area ... would look to nationalization as a last step--if it was the only thing standing between us and the abyss," says Michael Granoff, a private-equity fund manager who is friendly with several senior administration officials. "The people in charge of the economic policy side of things have pretty good communication with the people ... who sit where I sit," he says. "There is a shared understanding in these conversations."
At the very least, it's important to distinguish between two classes of people who often get lumped together under the heading "Wall Street." The first are people who mostly work at hedge funds and private equity firms. These people tend to be a little younger on average, a little more heterodox in their thinking, maybe a little more liberal in their politics. The second group frequently resides at larger corporate entities like big commercial banks--often big investment banks, too (though the distinction is disappearing these days). These people tend to be a little stodgier in their thinking and a little more conservative in their politics. (These characterizations aren't universally true, of course--my two-category classification is still pretty crude. But it's a decent place to start.)
At the outset of the administration, I think Obama had pretty close, constructive relationships with the first group, but weaker relationships with the second, which the administration was generally more suspicious of and believed had done more to make the mess. What we've probably seen in the last month or so is the administration developing a somewhat better relationship with the corporate types, too--which, again, is a mixed blessing, but not necessarily all bad if managed correctly.