Conventional wisdom says Dodd-Frank will survive no matter who is elected president in November. But conventional wisdom also said that President Barack Obama would handily win last night’s first presidential debate. Yet an energized Mitt Romney, the GOP challenger, won. As the debate touched on Dodd-Frank, it’s time to ask again what Romney would do to Dodd-Frank if he gets elected.
Despite the 90-minutes allotted, neither Obama nor Romney went into great detail about the details of the Dodd-Frank legislation.
On the surface, Romney says he would repeal many parts of Dodd Frank although he dodged specifics. He did decry the legislation’s inherent support for major institutions that are too big to fail and chided the regulators’ inability to provide a definition for qualified loans. Sounding a little like an Occupy Wall Street denizen, he said the Obama administration gave “a big kiss to the New York banks.”
While Romney endorses the concept of financial regulation, he never specified how he would improve the situation.
In a way, though, Romney pulled his punches. He could have hit harder and pointed out that the Obama administration has not yet prosecuted any of those on Wall Street that even Obama says put the financial system at risk. He did make points in stressing that Obama has failed to build a bipartisan bridge in Washington that would have lead to wider support for Dodd-Frank.
For his part, Obama said that his administration had a much-needed fight with Congressional Republicans to hammer out the specifics of Dodd Frank. Obama could have argued that the fighting has continued because the regulators have been crying out for more funding so that they can hire the armies they will need to implement the new rules and regulations. Obama could have also pointed out that in the end few Republicans supported Dodd-Frank despite the previous vigorous debate.
As for the derivatives that were at the heart of Great Recession, they mentioned mortgage-backed securities but did not drill down on the details for fear of losing the undecided, unwashed masses.
I think this is a mistake because it would have been an opportunity for one of them to take on the mantle of the Great Communicator for making complex matters understandable. (I guess Bill Clinton will keep that role for now.) But Obama made no mention of how far the over-the-counter (OTC) reforms have progressed and how they could improve the situation.
Romney avoided the matter of OTC reform entirely probably because he knows that the process is too far along.
After the debate, the pundit class that dominates the cable TV channels stated the obvious and actually watered down the discourse by pulling us back to conventional wisdom, which translated means conventional stupidity.
In particular, many of these supposedly intelligent pundits said that going into detail about Dodd-Frank was too much for the American people. Yet, if Main Street wants to play a greater role in governing Wall Street, they need to be better informed. So it’s the job of the president or a contender for the office to make clear the sometimes complex issues that have a huge impact on our lives. Clinton and Ronald Reagan did it and reaped great rewards for doing so.
So the post-debate chatter slid back to a discussion about the horse race between the two and each candidate’s style and energy levels; substance evaporated.
Back in June, Ari Fleischer, ex-White House press secretary for President George W. Bush, said at the SIFMA Tech Leaders Forum and Expo that if Romney is elected he and his fellow Republicans would essentially stall via slow-death delays what is left of the Dodd-Frank reforms in 2013.
The argument for this approach is that an outright effort to rewrite such a huge piece of legislation would be a major distraction to a new Romney administration that would want to focus on creating new jobs.
However, a future Romney administration could surprise everyone and the more unified and disciplined GOP could possibly craft and pass legislation that would put a screeching halt to Dodd-Frank. The variable would be the Tea Party faction, which has changed the dynamics of the Republican Party.
But for now an opportunity to have a much-needed, in-depth national discussion about Dodd-Frank and the way forward was lost. It’s as if the Great Recession never happened.
Need a Reprint?
Leave a Reply