Obama’s Original Sin
The president’s failure to demand a reckoning from the moneyed interests who brought the economy down has cursed his first term, and could prevent a second.
By Frank Rich / Published July 3, 2011
After 9/11, Rudy Giuliani went on Saturday Night Live to give New Yorkers permission to laugh again. But Mayor Bloomberg never did tell us when we could resume conspicuous consumption after the crash of 2008. And so, as we stumble through the second year of the official “recovery,” it’s been an improvisational return to high-end carousing in Manhattan.
A case in point was the late-May celebration of the centennial rededication of the New York Public Library. Surely no civic institution could be a more unimpeachable beard for a blowout. The dress code—no black tie—was egalitarian. The Abyssinian Baptist Church Gospel Choir, the New York City Gay Men’s Chorus, and that cute chorus from P.S. 22 in Staten Island—Glee diversity on steroids—were in the house along with some 900 invited guests, marquee names included (Toni Morrison, Jonathan Franzen). Bloomberg delivered a pre-dinner benediction from an altarlike perch on the main reading room’s balcony. “Free and open access to information may be the single most important component of any democratic society,” he said.
But it was impossible to banish toxic trace memories of the financial meltdown. Some two weeks earlier, the mayor had restricted the “free and open access” he now extolled. His fiscal 2012 budget called for slashing $40 million from the library system, a cut that would have mandated four-day weeks and the shutdown of a dozen branches.
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There was also the awkward matter of the gala’s “corporate chair,” Brian Moynihan, the CEO of Bank of America. In the pageantry preceding Bloomberg’s remarks, the slightly flushed Moynihan, looking like a nervous ring bearer in a stately wedding ceremony, was among those singled out by the announcer while marching down the reading room’s long center aisle in a processional of library trustees. No doubt he earned this honor by ponying up to give more New Yorkers more books. But free and open access to the unexpurgated books of his own bank—and of its gutted acquisitions, Merrill Lynch and Countrywide Financial—would be a far more valuable gift to our democratic society. Just a week before the library fête, the Huffington Post reported that B of A was stonewalling the Department of Housing and Urban Development’s investigation into fresh charges of defrauding taxpayers. Down in Naples, Florida, one Bank of America victim, Warren Nyerges, a 45-year-old retired cop, was getting ready to take the law into his own hands. Through a bureaucratic blunder—or worse—the bank had hounded his family for over a month, trying to foreclose on his house even though it was entirely debt-free. Unable to recover the legal expenses inflicted by this harassment, Nyerges staged a ruckus by hiring a lawyer who “foreclosed” on the bank’s local branch instead.
Nyerges, at least, would pry loose a settlement of $5,772 in early June. We could use him in New York, perhaps packing heat. Justice has not come to the city or its publicly funded institutions, which wouldn’t be in the fiscal hole they’re in today had malefactors like Bank of America not wrecked the economy in the first place and required taxpayer bailouts (two in B of A’s case). Still, you can’t blame the NYPL for collecting whatever reparations it could from Moynihan. One of the library’s formative patrons, present at the original dedication exactly 100 years earlier, was Andrew Carnegie, a ruthless tycoon second to none. But Carnegie did build a steel empire that sped the growth of the nation. Our own Gilded Age’s legacy is the financial “products” that greased the skids of America’s decline. At the centennial gala, you couldn’t escape the paw print of Stephen Schwarzman, the Blackstone Group billionaire whose library gift had entitled him to blast his name on any stray expanse of marble on the 42nd Street building. Schwarzman is nothing if not a representative 21st-century titan. His principal monument has been to himself, namely a notorious over-the-top 60th-birthday party, exquisite in both its bad timing and bad taste, that he threw the year before the crash. (If you’re shelling out a million bucks for an entertainer, is Rod Stewart the best you can do?) He is perhaps most renowned of late for comparing Obama to Hitler because the administration dared propose taxing private-equity firms’ share of client profits at a rate higher than 15 percent. (He later apologized.)
On that Monday night, the Republican Schwarzman was a political outlier in the crowd, which was dominated by New York’s liberal elite, financial and cultural divisions. Even Moynihan has been a faithful Democratic donor. These were Obama’s people (myself, yes, among them), and the worldly, let’s-turn-the-page spirit in the library that night uncannily reminded me of the hubristic vibe of Obama’s White House: The worst of the downturn is past, the wobbly economy will eventually creep forward, let the healed too-big-to-fail banks move on, and pray that the lagging indicators (i.e., employment) will catch up. Indeed, it’s a certain swath of the New York liberal elite that helped reinforce that Obama mind-set to begin with. Uncorrected, it could lead the president to defeat in 2012, even against a roster of opponents that almost everyone there that night would cavalierly dismiss as clowns.