If The New York Times is right about Tim Geithner's bank bailout plan bis, it will be interesting to have President Sarkozy's reaction. Geithner has come down squarely against punitive actions against the banks and their officials, even those whose decisions he acknowledges were major precipitants of the crisis. Sarkozy in recent weeks has taken a much harsher line toward banks, at least verbally and to some extent pragmatically, in limiting executive compensation. To be sure, Europe's banking system seems to be less dysfunctional than the American system, and Geithner appears to have taken the position that the emergency is too dire to indulge in the pleasure of punishing the guilty, whose technical knowhow he says is needed at the moment. Sarkozy is not so constrained, and is free to harass riskophilic financiers to his heart's content.
Politically, Sarkozy is surely wise to put himself at the head of the angry crowd. Obama is taking a huge risk in choosing to reward, or at least refrain from punishing, vice. Even if the maneuver is successful, he may suffer for it. The misdeeds of the bankers are too palpable, and their continuing self-indulgence is plain in a way that the workings of the credit system are not.