Jeez, Wall Street and Dodd-Frank, get a room already!
It turns out that all of the Dodd-Frank bashing that Jamie Dimon and the other heads of big New York banks constantly do is just their version of how married couples might use a little light S&M to keep things spicy in the bedroom.
But don't worry, Mitt Romney is on to their perverted games. At last night's debate, he declared that a key component of the financial-reform law was "the biggest kiss that's been given to New York banks I've ever seen."
This came as a shock to Wall Street, notes Politico's Ben White, who writes that it
"blew up [his] inbox like no other" line of the night. One such email, from a "New York" bank executive, said: "Doubt that most folks on Wall Street would have predicted that Romney would have taken the most direct shots at 'N.Y. banks' at this point. ... If he'd named names, it would have been his top five contributors."
The part of Dodd-Frank Romney was referring to was the part that designates several banks and other institutions -- not just New York banks, but also insurance companies and banks based outside of New York -- as "systemically important financial institutions." Firms that get the SIFI label have to provide a "living will" that lays out a plan for their orderly euthanasia in the event of a financial crisis. As Ben Protess of the New York Times writes, this is "hardly a wet kiss." The SIFI set has to hold more money against potential losses and is subject to tighter regulation.
This canard, that Dodd-Frank essentially sets "too big to fail" in stone forever, is one of Republicans' favorite arguments against Dodd-Frank. It sounds good and puts them on record as being against banks being "too big to fail," along with pretty much everybody (aside from the Jamie Dimons) in the world.
But it is a misleading argument, and repealing Dodd-Frank ultimately favors the banks. If they really enjoyed Dodd-Frank's wet sloppy kisses, why would they be spending so much money to furiously do away with it? (That approach is working pretty well, by the way, as demonstrated last week, when Wall Street won another round in court against Dodd-Frank, when a judge blocked new rules setting limits on speculation in commodities.)
As my former colleague David Weidner at the Wall Street Journal points out, this is of course Romney's ultimate goal -- to help the banks by doing away with Dodd-Frank. Sadly, though, President Obama's approach, aside from causing a few hurt feelings among hyper-sensitive bankers, has hardly been much more painful for banks.
Update: Rep. Barney Frank (D-Mass.), for whom the Dodd-Frank act was partly named, told the Huffington Post's Bonnie Kavoussi last night that Romney's charge was off-base, among other inaccuracies.
Update 2: Dennis Kelleher, founder of Better Markets, the non-profit group lobbying for financial reform, just emailed a statement about Romney's claim, calling it "false and misleading" and adding: "Romney wants to repeal [Dodd-Frank], which would be the biggest, sloppiest kiss possible to Wall Street banks and a kick in the pants to the American taxpayers who are going to get stuck with the bill -- again -- for their recklessness if financial reform is repealed by Mr. Romney."
When Obama took office in 2009, the deficit was projected to be $1.2 trillion during that year, and it <a href="http://www.nytimes.com/2012/10/04/us/politics/a-closer-look-at-what-the-presidential-candidates-said-in-the-debate.html?hp">ultimately turned out to be $1.4 trillion</a>, according to Congressional Budget Office data cited by <em>The New York Times</em>. The deficit is expected to be $1.1 trillion for fiscal year 2012.
The Congressional Budget Office estimates that healthcare reform will reduce the health care industry's workforce <a href="http://www.huffingtonpost.com/2012/10/03/mitt-romney-obamacare-jobs_n_1937929.html">by only about 0.5 percent</a>, largely because workers will decide to retire early or work fewer hours. And if Romney's Massachusetts health care reform law is any indication, job loss won't be a big problem; employment trends in the state have mirrored national trends since Romneycare took effect.
The Dodd-Frank regulations aim to prevent another housing crash like the one that helped to cause the 2008 financial meltdown by <a href="http://www.cbsnews.com/8301-505245_162-57517942/why-it-matters-wall-street-regulation-and-reform/">banning high-risk lending practices</a>, according to CBS News. In addition, the housing market has <a href="http://www.usatoday.com/story/money/business/2012/10/02/home-prices-rising/1608957/">been on a slow rebound</a> since Obama took office. If anything, it may be banks that are holding back the housing recovery. Many are <a href="http://online.wsj.com/article/SB10000872396390443890304578006482230678780.html">slow to lend</a> because they're concerned Fannie Mae and Freddie Mac will make them take back any bad loans, the <em>Wall Street Journal</em> reports.
The indirect effects of Obamacare have yet to be determined, since the law has yet to be implemented. But as the law is written now, <a href="http://abetteriowa.desmoinesregister.com/2012/10/03/obama-romney-debate-fact-check-claims-on-tax-cuts-and-job-gains-need-second-look/">Obamacare doesn't cut seniors' benefits</a> as part of its plan to curb health care costs, according to <em>USA Today</em>. Obama's healthcare law would curb benefits to health care providers and insurers, but doesn't directly cut seniors' benefits. <a href="http://abetteriowa.desmoinesregister.com/2012/10/03/obama-romney-debate-fact-check-claims-on-tax-cuts-and-job-gains-need-second-look/">Critics allege however</a>, that the cuts in payments would have the unintended consequence of hurting seniors because doctors would stop accepting Medicare patients, according to <em>USA Today</em>.
Though Obamacare does create an independent board,<a href="http://www.sfgate.com/business/bloomberg/article/Romney-Plan-Needs-Economic-Growth-to-Add-Up-3918731.php#page-3"> the law prohibits the board</a> from making recommendations to "ration health care," or "otherwise restrict benefits or modify eligibility,” according to Bloomberg.
Some workers may switch from their employer-provided health plans, according to the Congressional Budget Office, but that number is more likely to be closer to <a href="http://www.huffingtonpost.com/2012/10/04/obama-romney-debate_n_1938067.html">between 3 and 5 million</a> per year between 2019 and 2022.
President Obama's proposed budget is estimated to <a href="http://www.huffingtonpost.com/bernard-whitman/reason-22-1-trillion-in-s_b_1819355.html">cut about $1.1 trillion</a> over the next 10 years and, so far, Obama has signed $2 trilion worth of spending cuts into law, according to Democratic Party Pollster Bernard Whitman.
President Bill Clinton managed to balance the budget during his time in office with a <a href="http://www.newsobserver.com/2011/07/16/1346965/under-clinton-the-budget-balanced.html">tax boost for those in the top 2 percent </a>of earners, according to Duke professor William Chafe.
Romney's tax plan would<a href="http://firstread.nbcnews.com/_news/2012/10/03/14207584-truth-squad-the-debate?lite"> cost the country $4.8 trillion</a> over the next 10 years, according to Tax Policy Center data, cited by NBC News.
Businesses that got government clean energy loans failed at a rate of <a href="http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/10/03/footnoting-the-debate/">about 1.4 percent</a> at the end of 2011, according to <em>The Washington Pos</em>t.