Wall Street Threatens a Sit-Down Strike

While Wall Street likes the Obama administration’s financial rescue plan and liberal economists Brad DeLong (pro) and Paul Krugman (anti) go head to head over its merits, The Wall Street Journal’s lead story today tells how the populist impulses of a Democratic White House have been checked in recent days by the president — and the not-so-subtle threat of a capital strike.

From the story headlined “Obama Dials Down Wall Street Criticism:”

Treasury Secretary Timothy Geithner and his colleagues worked the phones to try to line up support on Wall Street for the plan announced Monday. They told executives they don’t favor using the tax code to retroactively penalize specific individuals who had received bonuses, according to people familiar with the calls. They asked officials to sign on “in pencil, not ink,” and to “validate” or “express support” for the plan, these people say.

Do you think the bankers thanked President Obama officials for their tacit support amid the AIG firestorm? You must be new in town.

Some bankers say they turned the conversations into complaints about the antibonus crusade consuming Capitol Hill. Some have begun “slow-walking” the information previously sought by Treasury for stress-testing financial institutions, three bankers say, and considered seeking capital from hedge funds and private-equity funds so they could return federal bailout money, thereby escaping federal restrictions.

This is the capitalist version of a labor union’s sit-down strike: show up for work but don’t do what the boss says. The message is: protect our bonuses — because without us, you can’t make policy.

Like it or not, Obama gets the message and agrees.

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