Over the weekend, President Obama asserted that although there were many causes of the turmoil that ripped through our economy in the past two years, it was first and foremost “caused by failures in the financial industry.” He then suggests that the crisis could have been avoided “if Wall Street firms were more accountable, if financial dealings were more transparent, and if consumers and shareholders were given more information and authority to make decisions.” Interestingly, these goals mirror many of those articulated by FDR when he sought to establish the Securities and Exchange Commission (SEC) in 1934.
President Obama also asserts that the reasons we have lost control over the financial industry is due largely to the special interests that “have waged a relentless campaign to thwart even basic, common-sense rules” that would prevent abuse and protect consumers. Thanks to these special interests-best represented by the powerful lobby that represents the financial industry-and the obstructionism of the GOP leadership, whom he accused of waging a “cynical and deceptive attack” against” financial reform, even modest safeguards against the kinds of bad practices that led to this crisis are in jeopardy of being stalled in the Senate.
In taking on his opponents directly, President Obama has inched towards the tactics used by FDR to carry his landmark reforms through Congress. But to date he has avoided using perhaps FDR’s most effective weapon-a direct and hard hitting appeal to the populist anger that had swept the country in the wake of the 1929 crash; a populist anger that is not unlike the mood of the country today.
In FDR’s speech to the 1936 democratic convention, for example, Roosevelt, reflecting on the greed that led to the economic crisis, remarked that
“..it was natural and perhaps human that the privileged princes of these new economic dynasties thirsting for power, reached out for control over government itself. They created a new despotism and wrapped it in the robes of legal sanction. In its service new mercenaries sought to regiment the people, their labor, and their property. And as a result the average man once more confronts the problem that faced the Minute Man.“
In another speech given two years later, FDR noted that
“Unhappy events abroad have re-taught us two simple truths about the liberty of a democratic people. The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic State itself. That, in its essence, is fascism –ownership of government by an individual, by a group or by any other controlling private power.
The second truth is that the liberty of a democracy is not safe if its business system does not provide employment and produce and distribute goods in such a way as to sustain an acceptable standard of living.”
It certainly a good thing that President Obama, noting the loss of eight million jobs and the other terrible consequences of the recent financial crisis believes “we have to do everything we can to ensure that no crisis like this ever happens again.” But if we are to ensure this then perhaps we also need to look much more closely at the root causes, which are not merely economic, but also moral, having to do with the nature of democracy itself.
As to the desire to be bi-partisan, FDR also once said:
“The true conservative seeks to protect the system of private property and free enterprise by correcting such injustices and inequalities as arise from it. The most serious threat to our institutions comes from those who refuse to face the need for change. Liberalism becomes the protection for the far-sighted conservative.”
David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute.