Massachusetts Attorney General Martha Coakley lost her special-election for the Senate seat vacated by the untimely passing of U.S. Senator Edward Kennedy. Much has been said about the role of health care reform in the race. Apparently everyone in Massachusetts has health care and reasonable doubts about an expensive national plan that might not improve their services.

But in the final days -- lagging in the polls -- the race was less about health care and more about the Wall Street bailout and the state of the economy. Her opponent, Scott Brown, successfully capitalized on the bailout blues and Coakley pulled out the big guns and resorted to a theme she perhaps should have emphasized throughout, bashing the big banks.

One of Coakley's final campaign ads was a clip from a speech of Obama's. "She took on Wall Street and recovered millions for Massachusetts taxpayers. She went after big insurance companies and took on predatory lenders," said the popular President. All this was true. Coakley has a unique track record on these issues. As Attorney General she recovered $77 million for municipalities across the Massachusetts Commonwealth from UBS, Morgan Stanley, Citibank [3], and Merrill Lynch [4] under the False Claims Act. Coakley's cases were groundbreaking as they linked Wall Street directly to the subprime mess. The Wall Street Journal [5] reported that her $60 million settlement with Goldman Sachs Group subprime mortgage abuses "marked the first time a U.S. investment bank was forced to pay for its role in the housing fiasco that kicked off the recession."

But Coakley waited until she was in deep trouble to aggressively play the Bankster card.

State Senator Scott Brown [6] had never run statewide and was largely unknown in a state where he and his fellow Republicans represent only 15 percent of the Legislature. But Brown was a master at portraying himself as a man of the people. He drove a truck. He wrapped himself in the word "independent." He never used the word "Republican." And he repeatedly went after Washington for double-digit unemployment, bailouts, out-of-control spending and cronyism.

One Brown campaign ad features reams of cash being printed at the mint. The voiceover intones: "We need jobs now, not a Congress hell-bent on bankrupting America... We can end the bailouts, broken promises, and all the back room deals behind closed doors. Enough is enough." That last phrase is one often used by the progressive coalition National Peoples Action [7], which has rallied thousands in grassroots protests against the big banks, skyrocketing foreclosures and unfair bank bonuses.

Polling shows that public anger at the banks is so strong that it has moved from being a passing fad to being an "American value." And no wonder given that the banks are now reporting record profits and bonuses while the "real economy" is still suffering from the highest employment numbers in decades, historic foreclosure rates and no good news in sight. While many mainstream Democrats will see this election as a call to move to the middle, in truth Brown won because he was a charming guy running a competent campaign, and because he walked and talked like a populist, capitalizing on the anger and betrayal Americans feel about the Wall Street bailout and the still staggering economy.

Democrats ignore this message at their peril. They must pass meaningful financial services reform, reform that stirs up a Wall Street backlash, that truly puts an end to the high-stakes casino and prevents the next crash. Otherwise they will be tagged as friends of the special interests, just as Coakley was, and will also fall victim to the bailout blues.