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Legal Commentary: Prawfs
The Paulson bailout and Andrew Jackson's attack on the "Monster Bank"
By Dan Markel, Ethan Leib, Rick Garnett, Matt Bodie, Paul Horwitz , Steve Vladeck, and Orly Lobel
In the wake of the House of Representative's rejection of Paulson's bailout measure, I cannot help but think that the spirit of Andrew Jackson lingers among America's electorate. The rhetoric among members of Congress, op-eds, blogs, all sound suspiciously similar to Jackson's message accompanying his veto of the renewal of the Bank of the United States' charter. Henry Paulson seems to be our latter-day Nicholas Biddle. The investment banks now holding mortgage-backed securities play the role of the bank of the United States. One does even need to edit the current attacks on banks, eastern capital, government aid to private corporations to put these contemporary messages into the mouths of Jackson, Amos Kendall, and the other "hard money" Jacksonians who decried the "exclusive privileges" of the "rich and powerful" shareholders of the "monster bank."
But it is the location of the anti-Paulson votes that make me think that we are re-living a Jacksonian War against the Bank(s). Look at the New York Times map showing votes in favor and against the bailout. I have done no minimally scientific survey, but I am struck by how an initial glance shows that support for the bailout tracks the Yankee diaspora that supported John Quincy Adams. Note, for instance, that the Seventeenth Congressional District in Ohio (the southern half of Connecticut's Western Reserve, an abolitionist Yankee stronghold), the burnt-over district of New York (another Yankee abolitionist stronghold), Boston, San Francisco (settled by Yankees a century and a half ago) all signed up for the bailout. These are areas that have traditionally voted Whig and trusted government. They still trust government, and they'll be likely Obama votes, as they were loyal Adams votes.
By contrast, those Republican rebels who voted against the bailout seem to come disproportionately from the Appalachian diaspora of Scotch-Irish and Welsh voters who were Old Hickory's strongest supporters. The districts that went against the bailout include most of North Carolina, Virginia, Kentucky, eastern Tennessee (the Cumberland Gap), the Ninth Congressional District of Pennsylvania (Altoona), north Texas, southern California, and north Missouri. These voters tended to be resentful towards cultural elites in New England, suspicious of financial elites in Philadelphia and New York, and angry at being left out of the scramble for special privileges in the national capital
Could it be that the old Jacksonian mindset lives on in the great, great grandchildren of the Old Jacksonians? And that our latter-day Biddle, Henry Paulson, has been struck down by Jackson's intellectual heirs? If my vague suspicion is correct and we are seeing a resurgence of Jacksonian distrust of capitalists, then my further prediction is that this is going to be a bad year for Republicans. Republicans have done well when the neo-Jacksonians' resentment can be channeled against New England intellectual elites; Republicans do badly when the neo-Jacksonians turn their rage against Wall Street. The vote against the bailout might suggest that the latter, not the former, will govern ballots this November.
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