Administration officials have had an uneasy relationship with anti-banker populism. On the one hand, they've frequently and publicly scolded banks for paying out bonuses and, in more recent weeks, lobbying against consumer protections. On the other hand, they've provided Wall Street with funds to stay in business and allowed the high-risk, high-reward compensation culture to continue unimpeded. With the bad data for everyday Americans contrasting sharply with high-times on Wall Street, the administration is under increasing pressure to get serious about financial regulation.

On Sunday, White House advisers are signaling that they're willing to talk tough. White House adviser David Axelrod snarled that the size of bonuses was "offensive" and warned banks not to stand in the way of new rules. This time, do the threats have any teeth? Some pundits think that the government is looking to shift anxiety over joblessness to the most convenient scapegoats. But with wages at a 19-year low, if there's any time for action, it's now.

  • Washington Responsible for Wall Street Bonanza, writes Graham Bowley at the New York Times. "It may come as a surprise that one of the most powerful forces driving the resurgence on Wall Street is not the banks but Washington. Many of the steps that policy makers took last year to stabilize the financial system -- reducing interest rates to near zero, bolstering big banks with taxpayer money, guaranteeing billions of dollars of financial institutions' debts -- helped set the stage for this new era of Wall Street wealth...So even as big banks fight efforts in Congress to subject their industry to greater regulation -- and to impose some restrictions on executive pay -- Wall Street has Washington to thank in part for its latest bonanza."
  • Government Missed Its First Chance, says Paul Krugman, a prominent economist and left-leaning columnist for the New York Times. "Administration officials are furious at the way the financial industry, just months after receiving a gigantic taxpayer bailout, is lobbying fiercely against serious reform. But you have to wonder what they expected to happen. They followed a softly, softly policy, providing aid with few strings, back when all of Wall Street was on the ropes; this left them with very little leverage over firms like Goldman that are now, once again, making a lot of money. ."
  • Don't Take the Government's Outrage Seriously, says Yves Smith at Naked Capitalism. "Do you think the Adminstration's supposed fury is sincere, or merely playing to the crowd? Actions speak louder than words. The Administration, ONLY because the public was rip-snorting mad, announced plans to have tougher reforms in June, with details of various measures coming over July and August...There was never any intent to have real reform. The Administration has been an absolutely shameless backer of the banksters' interests (and John Dizard remarked that central banks had gone from being vestal virgins to camp followers, so they are now in good company). It is the industry has become such pigs that they are making a joke of even the bogus reform put forward. They are so confident of their mastery of the gameboard that they are refusing even to go along with token concessions necessary to preserve appearances. To put it more simply: The Executive Branch does not like being revealed as being a puppet of the banking industry. But it made this Faustian bargain, it has no one else to blame."
  • Yes, the Government Is Finally Ready for Action, writes Barry Ritholtz, an economic analyst at the Big Picture. "Well, good news kids: It appears that the White House has had enough; They are finally beginning to push back against the banking lobby. Obama adviser Valerie Jarrett was quoted as saying 'We are disappointed by the lobbying of anyone in the financial industry against regulatory reform.' That is a very broad statement -- in my read, it suggests a major change in policy is about to occur."