For an all-too-brief interlude it looked like Senator Blanche Lincoln might have settled on the staple Arkansas political strategy for hard and discontented times: go after Wall Street and the financial trusts.
She reprised Hattie Caraway and Jeff Davis, who exploited popular anger with financiers, commodities exchanges and trusts to win big victories for the Senate and, in Davis's case, for governor, too.
Hammered by her more liberal Democratic opponent for voting for the financial bailout of 2008 and for taking hundreds of thousands of campaign dollars from the finance industry, Lincoln suddenly sprang a bill on the Agriculture Committee, which she chairs, that imposes some pretty draconian regulations on bank trading of derivatives, the cloudy securities that were a leading cause of the financial collapse of 2008.
Eager to help their distressed colleague, Democrats on the Agriculture Committee quickly reported the bill out, and its central provisions were incorporated this week into the broad financial reform bill that Democratic leaders and President Obama hope to push to a final vote next month.
Everybody on Capitol Hill wants to be known as favoring tough financial reform, but Lincoln claimed that her bill was the toughest of all, and on derivatives she was probably right. It would require for the first time that derivatives be traded in the open on exchanges, but transpar-ency, we should have learned in the past decade, is oversold. It gives investors and the general public a false sense of safety and trust but it doesn't stymie the malefactors.
But Senator Lincoln's bill goes further. If a bank did not spin off its trading of credit default swaps, an especially lucrative form of deriva-tives, it could not get its retail deposits insured by the FDIC and it couldn't queue up at the Federal Reserve window to get cheap loans if it got into trouble. That has to make Goldman Sachs, Wells Fargo and J. P. Morgan Chase take notice.
For scant days Blanche Lincoln was the toast of Washington. Though her own rhetoric was polite, she was for a few days the scourge of Wall Street. If she avoided the Huey Long style of bombast herself, Republicans accused her and her committee of it. “Pandering populism that just dislikes anything that has to do with Wall Street,” Senator Judd Gregg, R-NH, called it.
The style worked for Senator Caraway, Lincoln's exemplar, in 1932, at the depth of the Great Depression, and for Davis a century ago after the Long Depression, which lingered in the Arkansas countryside for decades. Hattie herself was almost as polite as Blanche, but she had a fiery surrogate, Huey P. Long, who toured the state with her to tell people that the big boys of Wall Street whose greed had engineered the De-pression had decided that she had to go because she stood up for the little people. In every election year from 1900 to 1912 Jeff Davis raged against the gamblers of Wall Street, who played with the price of commodities and kept Arkansas's poor farmers in thrall.
But did it and can it work for Lincoln, who is close to the abysmal position in which Caraway found herself at the beginning of 1932, written off as she sought her first full term in the Senate? Blanche Lincoln is not Huey P. Long, or even Hattie Caraway, who eventually found a voice that was a pale imitation of Huey's wonderful invective. And she is certainly no Jeff Davis.
“I hope the day will soon come when we can see the stock gamblers of New York in felon's stripes,” Davis roared in his maiden speech in the U. S. Senate in 1907. Can you hear Lincoln saying that? Lincoln was about to schmooze with Goldman Sachs executives until the Securities and Exchange Commission filed civil charges against the company and one of its young traders this month.
Her heart just doesn't seem to be in it and maybe for good political reasons. Although the bank bailout of '08 is credited with triggering the great discontent, the evidence is that the tea-party crowd isn't really mad at the financial industry, which is entitled to satisfy its greed any way that it can, but only the government. A poll of tea partiers would almost certainly show they are opposed to any government regulation of the shadow market that brought us to ruin. The most popular candidate for the Senate with conservatives and tea partiers is Rep. John Booz-man, who is the only candidate who both voted for the bank bailout and still stoutly defends it.
Lincoln's brief fling with populism is more tactical than strategic, a counter to Bill Halter's campaign to characterize her as a Wall Street patsy. It probably gave her some short-term advantage but it was not a game changer.
It's too bad. If there ever was a time for legitimate anger at American finance it is now after it plunged the country into the deepest and longest recession in 70 years and after three decades in which the finance industry, which accounted for a third of all the domestic profits in the United States in the latter years of George W. Bush, paced the vast shift of wealth from the middle class to the top 1 percent.
Lincoln needs an assist from Huey Long. Here's the capper penned by Huey in a flier titled “Wall Street vs. the People” that he distributed at rallies for Hattie that could be tailored for Blanche:
“And today she finds herself surrounded, a target of the masters who have marked for destruction every member of the U. S. Senate who has ignored the ultimatum of the mighty. She has persisted in voting against the masters of Wall Street. She has offended the powers of for-tune. The overlords of business demand her retirement.”
Bill Halter would be toast.