In the financial world, the biggest story of the day is JPMorgan Chase. As Matt Yglesias explained, “Remember the ‘Volcker Rule’ that was supposed to stop systemically significant financial institutions from racking up huge losses on proprietary speculative bets? Well … JP Morgan CEO Jamie Dimon announced that his company just lost $2 billion on some of (French-born) ‘London Whale’ Bruno Iksil’s bets on credit default swap indexes.”
The New York Times added that bank reformers are saying “we told you so,” and getting a boost in their efforts to impose tighter industry regulations and standards.
There’s a political angle to this, of course, in part because government regulations in this area are still taking shape. It’s also notable that Dimon, a former ally of President Obama, has moved to the right and started meeting privately with Mitt Romney, even attending GOP fundraisers.
But this also seems like an appropriate time to also mention that Romney, if elected, intends to eliminate all of the new safeguards imposed on Wall Street, replacing them with, well, pretty much nothing.
Republican Mitt Romney is pledging, if he is elected president, to repeal the Dodd-Frank financial regulations, a position favored by donors on Wall Street who have sent millions the candidate s way. But he is nearly silent on how – without the regulation – he would prevent Wall Street from once again engaging in the risky practices that helped cause the 2008 financial crisis.
The gap in Romney s platform – made more notable as, at every turn, he criticizes President Obama s handling of the post-meltdown economy – has puzzled some economic specialists.
“He’s asking for permission to govern the country – but he’s saying do away with the government’s response to the Wall Street crisis,” said Cornelius Hurley, director of the Morin Center for Banking and Financial Law at Boston University.
Indeed, Romney not only wants to scrap the entirety of Dodd-Frank, created after Wall Street recklessness nearly collapsed the global financial system in 2008, the Republican also wants to eliminate Sarbanes-Oxley, created after the 2002 accounting scandals, including Enron.
At a certain level, this seems like political suicide, though the Republican clearly doesn’t see it that way.
Just four years after Wall Street pushed our financial system to the breaking point, Romney is effectively telling the public, “Vote for me so I can roll back the clock and make things easier on the Wall Street elite.” It’s anti-populism at its most craven.
But Romney believes the public hates government regulation, too, at least as much as voters hate Wall Street, and he can win a national race while promising to eliminate safeguards and layers of accountability in our financial system.
It’s a risky bet, on par with Dimon’s.