It was a horrendous week for the finance industry. The only encouraging sign is the American voter’s growing awareness that bigger government is not the answer to the current crisis.
This assertion obviously flies in the face of all received wisdom about populist instincts, especially during tough economic times. All weekend, the media has been in an uproar over the “unregulated” nature of the finance industry. The coverage’s underlying assumption is that voters are similarly concerned that the government was asleep at the regulatory wheel over the past few years. Hence, the Obama campaign has enthusiastically led the call for a vast new regulatory embrace of the finance sector and implicitly backed the $85 billion government bailout of mega‐insurer American International Group (AIG).
As a liberal Democrat, Sen. Barack Obama is seen as comfortably articulating a pro‐regulation position that dovetails nicely with voters’ populist tendencies on this issue.
Sen. John McCain, meanwhile, is portrayed as desperately playing catch‐up on the regulatory front.
First, Mr. McCain is criticized for his long‐standing opposition to onerous regulation of the financial sector. Then, he is criticized for being a Johnny‐come‐lately to the cause of greater government oversight of Wall Street’s new generation of robber barons. Implicit in both the media’s praise of Mr. Obama and its excoriation of Mr. McCain is the assumption that bailouts and more regulation are what voters want.
The stubborn little fact, however, is that is not the case — not if the very latest polling data is anywhere close to reflecting popular sentiment on the headline issue of the day.
A stunning Rasmussen Reports survey conducted last week found that only 7 percent of voters think the federal government should use taxpayer funds to keep a large financial institution solvent. Sixty‐five percent say let the company file for bankruptcy. These surprising numbers are generally the same among Republican, Democratic and independent voters.