When the fingers of blame are pointing in all directions, as they are even while the nation's financial crisis is still unfolding, this much is inevitable: The pointers as well as the pointees are getting poked in the eyes.
In the culture of Washington, few rituals are as predictable as the blame game, and this one was under way even before the government's quasi-nationalization of American International Group late Tuesday. With just 47 days until the presidential election, the game is all the more hard-fought because the stakes are so high.
“Whether it's a banking crisis, a food scare, Hurricane Katrina or Iraq, anytime something in the public policy arena doesn't go well, then fingers are pointing. This is Washington,” said Bert Ely, a longtime consultant on financial institutions.
Already the Democrats who run Congress are scheduling hearings to get to the bottom of the mess that began more than a year ago with the housing credit crisis and has spiraled lately to take down some of the nation's household names of finance.
The chairman of the Senate Banking Committee, Christopher Dodd, D-Conn., has lambasted the White House for the crisis and announced hearings to begin this week, only to postpone them because the witnesses — top government regulators including Treasury Secretary Henry Paulson — are too busy trying to contain the damage.
Yet Congress, too, is coming in for blame, both from within — pitting Democrats against Republicans and the House versus the Senate — and from without. The back-and-forth has been most prominent in the presidential campaign this week.
On Wednesday, Sen. Barack Obama seized on the government's bailout of American International Group to yet again assail the Bush administration and his Republican rival, Sen. John McCain of Arizona, for their “failed economic philosophy of the last eight years” that opposed government regulation and promoted big tax breaks for corporations.
McCain, meanwhile, has struck an increasingly populist tone and tried to divert voters' attention to Wall Street, where financiers' “greed and corruption” are the problem, he says. McCain also faults unnamed federal regulators.
After saying Tuesday that “we cannot have the taxpayers bail out AIG or anybody else,” McCain issued a statement on Wednesday supporting the bailout. He attributed the cascading problems to “failed regulation, reckless management and a casino culture on Wall Street.” He called for “strong and effective regulation.” Obama, in turn, called that stance an “11th-hour conversion.”
One thing is certain, said Ely, the financial industry consultant: “There's plenty of blame to go around.”