Populism

The shift began as the government leapt into action to stem the economic damage from the financial crash. For the many who felt they had not caused the situation and were helpless to stop it, the mortgage market collapse stoked anger towards big finance and big government alike.

“The financial crisis and its devastating aftermath turned millions of Americans on the left and right into angry populists,” said Larry Sabato, a professor of politics at the University of Virginia and the founder and director of the Center for Politics, which promotes civic engagement.

Enter the Tea Party and the conservative right.

Within a few months of the bank bailout, reports surfaced that the Obama administration, which had only recently taken office, planned to use some of the TARP money to help struggling homeowners. Critics on the right erupted, portraying it as a government handout. That view was embodied in a diatribe by CNBC commentator Rick Santelli, who mobilized a crowd of angry traders on the floor of the Chicago Board of Trade in February 2009.

“We’re thinking of having a Chicago tea party in July,” he said, to claps and cheers from those around him. “All you capitalists that want to show up to Lake Michigan, I’m going to start organizing it.”

It turned out to be a critical moment, crystalizing the populist anger on the right that led to the creation of the Tea Party. That wing of the GOP didn’t support the bank bailout and, to be sure, it rallied around opposition to Obama administration initiatives like healthcare reform as well.









But anger over the bailouts remains a prominent feature, so much so that rolling back the Gramm-Leach-Bliley Act, and reinstating the Depression-era Glass-Steagall Act, became part of the GOP’s official platform in 2016.

The Tea Party targeted candidates too likely to compromise on economic and social issues, and subsequently pushed the entire party to the right. That deeply conservative energy played a critical role in helping Republicans seize the House in the 2010 midterm elections.

And even as the Tea Party brand faded, it paved the way for Trump, who tapped into the same anger against “elites” and the establishment class during his successful 2016 presidential run.

“Donald Trump would not have been elected President without the Tea Party,” Sabato said. “They knew how to organize and found a candidate in Trump who spoke to their fury and prejudices in a way [John] McCain and [Mitt] Romney could not. ‘This is our last chance to save America’ — we heard this over and over at Trump rallies and on social media. That energy propelled Trump to a slender victory in key states. Trump owes the Tea Party rebellion a great deal.”

But the bailout didn’t just change the Republicans. Democrats were also upended by it.

“Under this bill, the CEOs and the Wall Street insiders will still, with a little bit of imagination, continue to make out like bandits,” Sanders said on the Senate floor in September 2008, before voting against the TARP package.

Pelosi, Frank and other Democrats played a critical role in passing TARP. But after the bailout was enacted, many on the left grew disappointed that Obama’s programs ultimately seemed to be helping far fewer struggling homeowners than the White House had projected, all while the banking system seemed to be getting back on its feet.

The big banks “substantially lost influence over the legislative process when Lehman Brothers collapsed and the crisis hit, and they never regained it,” said former House Financial Services Committee Chairman Barney Frank. The big banks “substantially lost influence over the legislative process when Lehman Brothers collapsed and the crisis hit, and they never regained it,” said former House Financial Services Committee Chairman Barney Frank.



That frustration could later be seen playing out in the Occupy Wall Street protests and Sanders’ own meteoric rise as a Democratic presidential candidate nearly eight years afterward.



Warren, meanwhile, launched an entire political career off her call to create the Consumer Financial Protection Bureau, which was ultimately included in the Dodd-Frank Act of 2010. That success helped spur her on to run for Senate in 2012, where her campaign targeted problems with Wall Street. She argued that big banks had prospered while consumers were left behind.



“People feel like the system is rigged against them. And here's the painful part — they're right. The system is rigged,” she said in a milestone speech at the 2012 Democratic National Convention. “Look around. Oil companies guzzle down billions in subsidies. Billionaires pay lower tax rates than their secretaries. Wall Street CEOs — the same ones who wrecked our economy and destroyed millions of jobs — still strut around Congress, no shame, demanding favors, and acting like we should thank them.”



Warren focused intently on how influence is peddled in Washington, pointing to a revolving door between the banking industry and government. That view has come to embody progressives’ distrust of federal regulators and their relationship with the financial sector.



“There’s greater skepticism of regulatory capture and misuse of power,” said Brian Knight, director of the program on financial regulation at George Mason University’s Mercatus Center.



Yet progressives like Warren and Sanders, both potential 2020 presidential candidates, aren’t alone in their sharp criticisms of the banking industry. Other rising stars of the Democratic party are still focused on the financial crisis and its aftermath.



That includes Alexandria Ocasio-Cortez, the progressive New York candidate who shocked the establishment when she overwhelmingly defeated Rep. Joe Crowley, a senior congressman with ties to Wall Street, in the state’s Democratic primary this summer. The 28-year-old Ocasio-Cortez worked as a waitress and bartender in college in the wake of the crash to help her mother stave off foreclosure on their family home.



Like Warren, Ocasio-Cortez campaigned on reinstating the old divisions between commercial and investment banking that Gramm-Leach-Bliley eliminated, blaming their repeal for the financial crisis. She also opposed a recently passed regulatory relief bill, slamming Democrats who supported it. Her victory was a reminder that the crisis remains a potent issue even ten years later.



“Banks have lobbied big-[money] Democrats to champion deregulation and make it look ‘bipartisan,’” she tweeted in June. “This is corruption. Plain and simple… This is why I am running for Congress. Because we cannot stand idly as big banks gut every last protection working families have left.”