EDITORIAL: Giving in to big banks
Nov 04, 2012 (Menafn - The Fresno Bee - McClatchy-Tribune Information Services via COMTEX) --To understand how Wall Street views the race between President Barack Obama and Gov. Mitt Romney, go to the Center for Responsive Politics' website, www.opensecrets.org/pres12/.
There you'll find Romney's five biggest sources of donations. They are, in order, employees of Goldman Sachs, Bank of America, Morgan Stanley, JP Morgan and Credit Suisse Group, five of the world's largest banking corporations.
While Romney has flip-flopped on many issues, he has been remarkably consistent on the subject of Wall Street regulation. He doesn't see much need for regulation and is especially contemptuous of the Dodd-Frank Wall Street Reform and Consumer Protection Act. He calls it the "biggest kiss" to large banks and says he would repeal it. If it was a kiss, it was an unwanted advance.
The 2010 law passed gives regulators authority to designate large banks as systemically important. Romney maintains the designation implies they are too big to fail, and harms small banks. Sheila Bair, a Republican and former chairwoman of Federal Deposit Insurance Corp., says Dodd-Frank has had little or nothing to do with small bank failures, and that the designation on big banks imposes stiffer regulations.
Importantly, Dodd-Frank adds transparency and regulation to previously opaque derivatives markets, valued by Bloomberg news service at almost 650 trillion worldwide. Bad bets by AIG and others on the derivatives market worsened the crisis. The nation cannot afford an unfettered derivatives market.
Romney has placed much of the blame for the housing crash on bad loans by federally backed lenders Fannie Mae and Freddie Mac, and called the Community Reinvestment Act, a 1977 law designed to encourage banks to lend to lower-income people, a disaster. But in its 545-page report, the Financial Crisis Inquiry Commission found that the Community Reinvestment Act "was not a significant factor in subprime lending."
Nor did the congressionally charged commission find that over-regulation lead to the near-depression.
For his part, Obama began his administration by being far too timid toward Wall Street. His Justice Department failed to open serious investigations into wrongdoing on Wall Street.
On Obama's watch, big banks have grown even bigger and their profits fatter. It's as if the crisis is a dim memory. The next president will have to confront the big banks, but it is unlikely either Obama or Romney will. They are too powerful. Too big to fail is too big for democracy.
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