In the wake of the Massachusetts special election loss, President Obama has struck a more populist tune. He and his supporters have been talking about “getting our money back” from “fat-cat bankers” on Wall Street who took TARP money. Siding with “Main Street” rather than “Wall Street” is a time-honored theme in American politics.
I wonder whether the “Wall Street vs. Main Street” pitch still has resonance, however. The reality is that many working Americans have 401(k) plans or some other form of retirement savings or pension plan that is invested in stocks and bonds. According to the Investment Company Institute website, in 2008 49.8 million Americans had 401(k) plans that held an estimated $2.4 trillion in assets. In short, lots of American families are invested with Wall Street. They watch the Dow and the S&P 500 and hope that their 401(k) plans will appreciate in value and allow them to retire earlier and wealthier.
As a result, in the 1930s or 1950s there may have been a bright-line distinction between “Main Street” and “Wall Street,” but that bright-line exists no longer. People may be upset by the size of the bonuses paid by banks that took TARP money, but I think many Americans not only aren’t reflexively opposed to Wall Street bankers, they hope that those investment bankers do their jobs well and create wealth that their 401(k) plans will share in.
If I am right in that perception, then politicians who want to rip into Wall Street should proceed with extreme caution. In the last few days, the stock market has fallen at the same time President Obama has attacked Wall Street bankers and Senators have declared they won’t vote for a second term for Federal Reserve Chairman Ben Bernanke. It may be coincidence, but it may cause many Americans to wonder why the President and the Senate seem to be playing politics with their retirement funds.