In a July report1 we wrote that:
Teddy Roosevelt was certainly no friend of business: the Great Merger Wave
of 1898–1903 was brought to an end by effective federal intervention, most
notably President Theodore Roosevelt’s celebrated trust-busting, which
began with a 1904 Supreme Court case [italics added].
It’s noteworthy then that, on the campaign trail, it was reported2 that:
Obama said he chose Roosevelt as an example because he took office at a
time when wealth was concentrated in a very few hands and because he
earned his reputation by going against the rich. "It was an era known as the
gilded age," said the Illinois senator. "Theodore Roosevelt decided not to
play along…[Today] we can't settle for a second gilded age."
Of course, “effective federal intervention” was necessitated in recent months
by a financial crisis that threatened a systemic collapse:
The placing of Fannie Mae and Freddie Mac into conservatorship by their
The $85 billion loan by the federal government to American International
Group in exchange for a controlling stake in the company.
The restrictions imposed by the Securities and Exchange Commission on
short selling of certain stocks.
The seizure of Washington Mutual by federal regulators.
The Emergency Economic Stabilization Act of 2008 authorizing the $700
billion Troubled Asset Relief Program (TARP).
The Federal Reserve’s facility to buy unsecured and asset-backed
commercial paper directly from issuers.
The Treasury’s investment of $250 billion in senior preferred bank stock,
half in nine large banks, and the remainder in thousands of small and
Then, too, there was the federal government’s $25 billion loan package to
Detroit automakers, which, as a Citi Investment Research report3 noted, came
“under the pretext of investing in fuel efficiency programs.”
So, with Senator Obama having made healthcare reform and energy policy key
elements of his electoral platform, it’s possible that about half the U.S.
economy could be at risk of some form of government oversight and regulation.
Just as important as Senator Obama’s victory on Tuesday is the fact that the
Democrats won full control of Congress — see Figure 2 and Figure 3 —
suggesting that the next President may have Congressional support to turn
much of his electoral platform into actual policy.