Bloomberg

Feb. 12 (Bloomberg) -- President Barack Obama is starting to look like the second coming of Jimmy Carter. If he’s going to avoid that fate, the president had better take radical action -- and fast.

That means doing more than offering belated talk about jobs, or waging ineffectual on-again, off-again bank warfare. What, after all, is the point of bashing Wall Street only to then blow bonus kisses to JPMorgan Chase & Co. chief Jamie Dimon and Goldman Sachs Group Inc. head Lloyd Blankfein?

Obama needs to ditch his professorial, community-organizer mien and start cracking some heads. Unless, that is, he is intent on paving the way for a Palin presidency in 2013.

Supporters are crying out for Obama to pull out of his tailspin. In an article in Politico, Douglas Wilder, the nation’s first African-American governor and an early Obama supporter, urged the president to get his act together.

“The need is becoming more obvious by the day,” Wilder wrote. “Getting elected and getting things done for the people are two different jobs.”

Obama’s lack of resolve even makes comparisons to Carter seem charitable. Financial blogger Eric Salzman argued that we haven’t seen such a lack of leadership “in the White House since our 15th president, James Buchanan, stood by and let the country dissolve into Civil War while trying to appease everyone.”

What’s to be done? Here are three ways for Obama to man up, chart a new course and avert the kind of debacle that tarnished his party in the eyes of a generation of voters.

Learn From Clinton

-- Bring congressional Democrats to heel with a Sister Souljah moment.

Such an action is named for former President Bill Clinton’s putdown of hate speech by a rapper -- and, by extension, the far-left wing of the Democratic Party. Clinton’s move was designed to appeal to centrist voters.

For his Sister Souljah moment, Obama needs to pick a particularly egregious action by his erstwhile allies on Capitol Hill and then use a veto, or the threat of one, to show congressional Democrats he is in charge, not them.

Sadly, Obama has already passed on two perfect opportunities. The first came with last year’s pork-stuffed economic stimulus bill. Obama should have threatened a veto unless Congress focused the legislation on unemployment, not pet congressional projects.

Don’t Be Afraid

The second opportunity involved the health-care bill initially approved by Senate Democrats. Obama should have made it clear to Majority Leader Harry Reid that he wasn’t about to countenance $100 million bribes to get the likes of Democratic Nebraska Senator Ben Nelson on board.

-- Don’t be afraid of the big, bad banks.

Obama can get financial reform if he wants it. He just has to realize that he’s, well, the president. And presidents don’t haggle with banks that are alive only thanks to $8.2 trillion in government lending, spending and support. Nor do they let armies of bank lobbyists tie them down on Capitol Hill.

And they certainly don’t countenance bank chiefs who fail to show for White House meetings. Trying that with Nixon would have meant quick inclusion on the “enemies list”; George W. Bush’s folks would have issued an immediate invitation to go hunting with Vice President Dick Cheney.

Obama, on the other hand, talks tough, then worries about upsetting Wall Street. That’s insane.

Wall Street respects only one thing -- strength. If it smells weakness, the Street will try to leave the other guy with nothing but his socks and a smile.

Offer a Reminder

So don’t ask, tell. Remind the banks, none too subtly, that Obama can make their lives miserable.

The government, after all, controls bank regulation. Maybe, for instance, capital requirements at too-big-to-fail institutions like Goldman or JPMorgan should shoot up to 25 percent. Perhaps the amount of borrowed money financial behemoths can use needs to be capped at five times equity.

And since banks are so opposed to a Consumer Financial Protection Agency, Obama will have to find a new job for Elizabeth Warren, the driving force behind that proposal. Heading up the Office of the Comptroller of the Currency, which regulates all the big, national banks, might be a perfect fit for her.

Or the banks can quickly agree to take some lumps and get on board with financial reform.

That’s the kind of deal-making Wall Street responds to.

Use the Broom

-- Clean house.

Treasury Secretary Timothy Geithner has to go. So too does White House economic adviser Lawrence Summers. And while he’s at it, the president should jettison Chief of Staff Rahm Emanuel.

All are too stuck in the pre-crisis, let’s-not-risk- curbing-financial-innovation mentality that helped get us into this mess. They also tie Obama directly to the crisis, negating claims that it was someone else’s doing.

Geithner was head of the New York Fed and a lead singer in the bailout choir. Summers, back during the Clinton administration, helped knock down the separation of commercial and investment banking while making sure derivatives markets wouldn’t be regulated. And Emanuel was a director of mortgage giant Freddie Mac, now a ward of the state.

Not to mention that Geithner, with plenty on Capitol Hill calling for his scalp, no longer is a credible salesman for the administration’s policies. Emanuel, meanwhile, is so driven by the goal of striking a deal, any deal, that he ends up letting Congress call the shots.

In their place, Obama needs people who understand but aren’t beholden to Wall Street. And he needs folks who are willing to stand up to Congress.

Obama needs to get tough. If he doesn’t, voters will.

(David Reilly is a Bloomberg News columnist. The opinions expressed are his own.)

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To contact the writer of this column: David Reilly at dreilly14@bloomberg.net

Last Updated: February 11, 2010 21:00 EST