The fallout from banking giant JPMorgan Chase’s $2 billion — and counting — loss has made its way into the presidential campaign. The president and his presumptive GOP challenger Mitt Romney have very different views about the regulation of Wall Street and in particular, the Dodd-Frank financial systems overhaul law.
In an appearance on The View set to air on Tuesday, but previewed Monday night on ABC’s World News Tonight, President Obama pointed to JPMorgan’s troubles as validation for his administration’s policies.”This is why we passed Wall Street reform,” he said.
The president described JPMorgan as one of the best managed banks around and said the bank’s president and CEO Jamie Dimon is “one of the smartest bankers we’ve got.”
Yet the president said JPMorgan found a way to lose $2 billion, and maybe more, on a bad bet.
“You could have a bank that isn’t as strong, isn’t as profitable making those same bets and we might have had to step in and that’s exactly why Wall Street reform is so important,” the president said.
Romney And Dodd-Frank
Overseeing the passage of the Dodd-Frank law is one of the Obama administration’s major accomplishments. So perhaps it is no surprise that the Obama campaign quickly pointed out that Romney wants to repeal Dodd-Frank.
Campaign spokesman Ben Labolt says that would be “an engraved invitation for Wall Street to return to the biggest, riskiest bets that crashed the economy.”
The Romney campaign responded saying he believes in a system of sensible financial regulation. In March, a voter at an event in Ohio asked Romney if he plans to repeal Dodd-Frank.
“Yes. There’s a direct answer,” Romney said.
Romney went on to say he would replace it along with some of the other measures he’s promised to do away with as part of his campaign.
“When I get rid of Obamacare and I get rid of Dodd-Frank and I get rid of Sarbanes-Oxley, it doesn’t mean that I don’t want to have any law, or any regulation,” Romney said. “It means I want to make sure it’s modern, it’s updated [and] it goes after the bad guys, but it also encourages the good guys.”
Romney devotes just one paragraph in his 160-page plan for jobs and economic growth to his vision for replacing Dodd-Frank. He says some of the concepts in the law have a place, like greater transparency and greater capital requirements.
Eliot Spitzer, former Democratic attorney general and governor of New York and a sort of Wall Street watchdog, says that isn’t enough.
“The problem for Mitt Romney is that we all know he wants to repeal Dodd-Frank because his mantra is fewer regulations,” Spitzer says. “Yet, he has never told us what he would replace it with.”
That said, Spitzer and others point to the fact that JPMorgan was able to lose so much money so fast on a bad hedge as a sign that Dodd-Frank isn’t perfect either, and the president didn’t push hard enough to regulate Wall Street.