Expert Panel Discusses the Obama-Business Relationship

Just about anyone following the relationship between the Obama administration and the business community—particularly Wall Street—would agree that things are not going well. On April 27, a panel of four Yale SOM faculty members gathered to address the issue. "Both parties essentially speak different languages and they keep having trouble relating," said Jeffrey Kindler, distinguished faculty fellow and the former CEO of Pfizer. "Rhetoric does matter. Things get heated, which garners mistrust."

Kindler was joined on the panel, sponsored by the Democrat and Conservative student clubs, by Gary Gorton, the Frederick Frank Class of 1954 Professor of Management and Finance, Andrew Metrick, the Michael H. Jordan Professor of Finance and Management, and Douglas Rae, the Richard S. Ely Professor of Management, with Jeffrey Sonnenfeld, the Lester Crown Professor in the Practice of Management, moderating.

All the panelists agreed that President Obama faced a very difficult, even unprecedented, set of problems upon entering office: a financial crisis that led to a deepening recession, two wars, a ballooning deficit, and a political environment becoming increasing toxic. "The president inherited something essentially impossible," said Metrick, who worked as chief economist for the Obama White House's Council of Economic Advisors. "When FDR became president, the country had been in a deep depression for four years. The country was fed up and looking for anything. When Obama came into office, people didn't think things were so bad; they didn't think we'd fall into a depression."

Throughout the panel, speakers kept coming back to Franklin Delano Roosevelt, both for the situation he faced, and how he handled it. Gorton pointed to a speech FDR gave in the midst of a bank run. The next day, he said people actually lined up to put their money back into banks. "You have to engage people; you have to give them the confidence that you know what you're doing. Perception is extremely important," he said. "Obama didn't come through on this, which is surprising considering how good he was at the campaign."

Once the financial crisis eased and the Obama administration turned to healthcare and Wall Street reform, the perception of how pro or anti-business the president was became a looming issue. Metrick spoke of a split between the political and policy arms in the White House, with the rhetoric coming from the president often not matching the policies being put forward. Kindler, who helped negotiate a pharma deal as part of the health care bill, saw this first hand. "A lot of what the president was saying was just red meat for the base," he said. "We were told the policies were going to be different—and, in fact, they were." Kindler noted that since the midterm elections, the White House has made serious efforts to improve relations with business.

Rae agreed with the other panelists that rhetoric between the two sides is a crucial element in the strained relationship. But when one steps back and looks at the policies enacted, things don't look nearly so bad. "When you look at rhetoric vs. policy, it's pretty clear that not much pain has been inflicted on Wall Street," he said.