Posted by Andrew Marshall on Tue, Sep 18 2012

All Posts by Andrew Marshall

What the US elections might mean for Dodd-Frank

The future of Dodd-Frank will depend on the outcome of the presidential and congressional elections.  Below here’s what the two candidates say, in their own words, on Dodd-Frank.  Then we offer some thoughts on the implications for the industry, and speculate on how the media – in the US and internationally - might cover this pre and post-election.

In their own words

Mitt Romney

Barack Obama
“As president, Mitt Romney will also seek to repeal Dodd-Frank and replace it with a streamlined regulatory framework. The recent financial crisis exposed serious weaknesses in a regulatory system that was poorly equipped to deal with dynamic and evolving markets. The government’s response was to layer on new regulations and invent new bureaucracies that do not address the underlying causes... Rather than dealing directly with those issues, the government gave itself an open check book to write ambiguous regulations that have left our businesses and households uncertain of their obligations and uncompetitive in a global marketplace."

“Some of the concepts in Dodd-Frank have a place. Greater transparency for inter-bank relationships, enhanced capital requirements, and provisions to address new forms of complex financial transactions are all necessary elements of effective financial reform. But these concepts must be translated into law in a way that creates a simple, predictable, and efficient regulatory system….

“Look, no-one is talking about deregulating Wall Street” Mitt Romney, CBS, 8/15/2012
“President Obama passed the Wall Street Reform and Consumer Protection Act to hold Wall Street accountable, prevent future financial crises, and end the era of “too big to fail.” Wall Street reform ensures that if a financial company fails, it will be Wall Street that pays the price—not the American people—and sets ground rules for the riskiest financial speculation. President Obama also enacted a Credit Card Bill of Rights to protect consumers from unfair and deceptive practices, like over-the-limit charges and hidden costs"

What the industry will look out for

If Romney wins If Obama wins
• While Romney’s plan compares Dodd-Frank with Obamacare, he’s clearly got wiggle room. It’s difficult to see wholesale repeal being a top Romney Administration priority, given that congressional passage would be arduous, and that Wall Street would now rather see changes in key areas rather than the disruption of wholesale repeal.

• Some weakening of the Volcker Rule is likely, though the recent JPM losses have complicated the politics of such a move.

• Inevitably, re-election of the incumbent President will mean less potential change in Dodd-Frank, though Republican control of the Senate as well as the House would influence the environment for its implementation.

• If Republicans take the Senate while Obama is re-elected, pressure to water down the Volcker Rule would clearly increase.

Carry on reading the full article here

Dodd-Frank, Obama, Romney, US Elections,
comments powered by Disqus
Back to top