Michael Rentiers

Everybody needs somebody to love.

In the waning days of the recent Massachusetts special election, the impossible was quickly becoming probable – a Republican victory in the race to replace the late Senator Ted Kennedy. Attempting to shift momentum, President Obama sent up a trial balloon in the press stating that he would be asking Congress to pass a new “fee” on the countries largest banks in light of what he saw as soaring profits and lavish executive bonuses.  The hope was not to correct an actual wrong but to tap into grassroots populist anger.  The President’s political advisers believed they could direct that anger at the financial industry while cornering the Republican candidate into defending “fat-cat” executives on Wall Street and in the banking sector.

The plan in Massachusetts did not work out the way the President and Congressional Democrats had hoped. It did galvanize their plan for the 2010 mid-term elections – mount a populist campaign to demonize America’s largest financial institutions and force Republicans to block their tax and regulation proposals thus driving a wedge between them and the middle-class.

From Politico:  “Obama to Propose New Bank Curbs”

“The Administration’s policy response isn’t based on facts or logic, it based on class warfare politics and fear,” said a financial industry executive. “If enacted, theses proposals will undermine the effectiveness and competitiveness of the U.S. financial sector, and therefore damage the growth and job-creating capacity of the U.S. economy.”

Obama seemed to welcome the industry’s opposition. “If these folks want a fight, it’s a fight I’m willing to have,” the president said. He also criticized the “soaring profits and obscene bonuses,” at financial firms that say they are still unable to make loans to American businesses. He warned the financial industry to “work with us and not against us.”

The Democrats are proposing the “Financial Crisis Responsibility Fee” as an attempt to exacerbate public mistrust toward the countries largest banks.  Because of the weakened economy, this strategy represents a golden opportunity to blame the banking industry and force Republicans into a potentially defensive posture when they oppose the “fee.”

It is not a new tactic, but left unchecked, it is a highly effective strategy that can seriously damage the private sector for pure political gain.  Like the insurance industry, oil companies, the fast food industry and even government affairs professionals, the banking industry will be the scapegoat this election cycle.  And, left undefended, their reputation could be irreparably damaged in the eyes of the American public.

Simply mounting a traditional lobbying campaign on Capital Hill to oppose the proposed legislation won’t work.  The goal here is not necessarily to enact the “fee.”  The goal is to have an enemy and a message that resonates at the grassroots level.  The campaign against the banks, like so many industries before it, will be waged in battleground states and in congressional districts across the country.  The banking industry must understand the nature of the fight.  They must be proactive in shaping public opinion about their industry by conducting their own grassroots campaign.  They must define themselves against attack and protect their ability to conduct the very business that will help bring the economy back to prosperity.

The fact is, every private sector industry in this country should be aware of the shifting political landscape beneath them.  Like so many previous examples, the private sector simply cannot afford to be caught off guard when public opinion turns or when politicians need a scapegoat.  In this day and age every business and industry that invests in lobbying, should be investing in grassroots-based communication and public relations strategies.

The playing field has shifted for the foreseeable future.  Politicians are being driven by what is happening in their districts and no longer by what happens in their Capital Hill offices.  If your business isn’t out in the field carrying your message, then you may be the next target of election year politics.

This post will be cross-posted to my firm’s “Government Affairs News Brief.”