I thought today was a good step [for Obama], just in theatrical terms, not the best step.

I still want to see him surrounded by fisherman, by regular folks down there. And he still hasn't done that. ...

But -- but people want to know that the communication with the government is two-way. And that doesn't mean you just sit with a series of government officials in your shirtsleeves around a table. It means you are in a non-governmental setting, where most people are, at a restaurant, maybe out on a boat with people.

This is a moment to think big and creatively. As distant as risky drilling rigs off Louisiana may seem from the New York financial laboratories where wizard bankers synthesized subprime credit derivatives, Obama could explain the important connections: how, after decades of antiregulatory fundamentalism in Washington, the feckless Minerals Management Service [MMS] became the Securities & Exchange Commission [SEC] of the oil business.

It is no coincidence that staff members at both agencies watched pornography on government computers when they should have been monitoring their respective beats. Although corruption and incompetence seem to have run deeper at the soon-to-be-dismantled MMS, the zeitgeist of the two places was similar, according to investigations and congressional hearings: Industry was to be trusted, even when government overseers had no more idea what transpired on the trading floor at Lehman Brothers or Bear Stearns than they did on the ocean floor beneath the Gulf of Mexico.

The question is: What will Obama do about it?

One route to political rehabilitation would be to redefine how government interacts with business. The goal he should articulate is protecting capitalism—and the society it's intended to serve—from the tendency of the profit-minded to go to extremes. ...

As investigators reconstruct events leading up to Apr. 20, Sarah S. Elkind, an historian of politics and the environment at San Diego State University, warns against focusing on minutiae to the exclusion of the big picture. Within the MMS, she says, "The employees followed cues from political appointees during the Bush Administration and earlier Administrations, going back to 1980, and including Democrats as well as Republicans. The message was that government doesn't work, and industry always knows what it's doing. What did we expect the employees to do?" ...

Obama has spoken expansively about restoring respect for government service. His occasionally populist rhetoric aside, he has been solicitous of corporate interests, too. Recall the astonishing bailout of General Motors. Just three weeks before the Deepwater Horizon exploded, the President had proposed expanding offshore oil exploration, in part as a bid for Republican votes for stalled energy and climate legislation. At the time, Obama praised advances in drilling technology.

"Where I was wrong," he said on May 27, "was in my belief that the oil companies had their act together when it came to worst-case scenarios." By his own admission, this product of Harvard Law School and liberal South Side Chicago politics was mesmerized, along with everyone else, by the myth of industry omnipotence. ...

Until someone figures out how to fix BP's leak, the idea the President should stress is how to reframe the debate about oil, investment banking, and other technologically sophisticated industries. Obama should argue that we need better government oversight of business, not to harm it, but to nurture it. He could invoke the memory of the New Deal regulatory revolution, which shielded industry and finance from calls for socialism after the Great Depression.

He won't win over Tea Partiers who see the New Deal (and the income tax and civil rights laws) as constitutional infringements. But a majority in America may well be receptive to an appeal that Democratic pollster Douglas E. Schoen described this way in a roundtable on the politics of the spill on washingtonpost.com: "We are all in this together—not as corporations or populists, not as Democrats or Republicans, but as Americans working to solve the problem collectively." In a speech in Pittsburgh on the afternoon of June 2, Obama started in this direction, then swerved toward partisanship. The Republican agenda, he said, "basically offers two answers to every problem we face: more tax breaks for the wealthy and fewer rules for corporations." [my emphasis]

Ivor Pether, who helps manage $9.2 billion at Royal London Asset Management, including BP stock, told Bloomberg News: "We're getting into share price territory where analysts speculate about takeover possibilities, because the loss of market value is much greater than the estimated 'worst case' costs." Buyers haven't surfaced yet, he added, "because the near-term uncertainty is so high." BP spokeswoman Sheila Williams declined to comment.

The company's woes grew worse when the Obama Administration announced June 1 that it will investigate potential criminal and civil violations related to the spill. "We will prosecute to the fullest extent of the law," U.S. Attorney General Eric Holder said. While Holder didn't get into particulars, troubling facts have already surfaced. The House Energy & Commerce Committee released internal BP e-mail showing that company employees had worried six weeks before the rig explosion that workers were struggling to control the well below. A criminal indictment of BP and other companies involved in the accident—perhaps for infractions of the Clean Water Act or other environmental laws—"is very likely," David M. Uhlmann, a former chief of the Justice Dept.'s environmental crimes section, told Bloomberg. Uhlmann, who now teaches at the University of Michigan Law School, pointed out that after the Exxon Valdez oil spill in Alaska in 1989, ExxonMobil (XOM) pleaded guilty to charges of that variety.

Another potential line of prosecutorial inquiry, and one that could have more severe effects on BP, would focus on whether executives lied in formal statements to the government. Depending on how high up the chain of command the probe went, a cover-up investigation could seal the fate of Chief Executive Tony Hayward and underscore questions about BP remaining independent. The company has said it will cooperate with investigators. [my emphasis]

At this point in time, there is little evidence that Obama's job rating has suffered substantial erosion because of the spill. While it may emerge over time, so far there is little sign of a negative effect on Obama's overall job approval: over the past month he has been consistently around the 47%-48% mark among registered voters. As we have said before, the economy is still far and away the number one issue for voters, and perceptions of it has far more impact on Obama's approval rating than the Gulf spill - at this point in time.