President Barack Obama is largely right about the need to re-regulate banks, but the way he is going about it smacks of political opportunism.
After the Democratic loss in Massachusetts and with his health care reform bill becalmed in the Senate, he needs a victory. And the big banks, which vie with Washington in unpopularity with the public, were too tempting a target.
In his new role as tough-talking populist, the cerebral president promised, "Never again will Americans be held hostage by a bank that is too big to fail." If the banks wanted a fight, the president said he was ready.
With exquisitely bad timing, Goldman Sachs announced record earnings of $13.39 billion for 2009 and an average payout per employee in salary and bonuses of $498,000, which the bank seemed to think indicated restraint on its part.
This played into the public anger that Obama seemed to be stoking, that having used taxpayer money to return to profitability, the bankers were now treating themselves with generous bonuses for their foresight in accepting that money.
Standing at his side while the president was beating up on the bankers was Paul Volcker, an eminent and respected economic troubleshooter who was Federal Reserve chairman in the Reagan years. Volcker heads an outside group of economic advisers to the president that had not been in much public evidence until now.
Indeed, Obama went further and endorsed what he called the "Volcker Rule," legislation that would bar commercial banks with federally guaranteed deposits from making speculative investments on their own behalf. Investment banks with no access to federal money would be free to invest as they please on the understanding there would be no federal bailout if they fail.
The other parts of the president's new populism are a tax on the 50 largest banks to recoup any taxpayer losses from the bailout and a limit on the size of banks relative to the system as a whole.
Obama must get this new plan through Congress. The House has already passed his earlier overhaul of the financial industry, complete with a consumer financial protection agency that the industry strenuously opposes. It's before the Senate now.
"If these folks want a fight," vowed our new populist leader, "it's a fight I'm ready to have." Not much else is certain, but this is: He will get his fight.