The GOP and the Big Banks
9:36 AM, May 19, 2012 • By JAY COST
The Democratic party, predictably, would have you believe that the GOP is the party of the big banks, but the story is actually more complicated than that, and more recent history actually suggest the Republicans are morphing into an anti-bank party.
No doubt that part of the Republican party has a long, friendly relationship with the big banks. This was the Northeastern GOP, which naturally was aligned with them because the banks were all situated in their region. But the Western flank of the GOP was actually quite anti-bank throughout the party's history, which is why it swung to the Populists in 1892 and then to the Bryan Democrats 1896: they thought the bankers back in the Northeast ripped them off with high interest rates and monetary policies that stifled inflation.
Another anti-bank faction in this country was the South, for similar reasons. For most of its history the region's politics was dominated by indebted farmers, meaning that Southern politicians were happy to regulate debt owners in the Northeast. In fact, Carter Glass -- a Virginia Democrat -- was the author of the Federal Reserve Act of 1913 and the co-sponsor of the Glass-Steagall Act of 1933. His attitude about federal regulation of the banks reflected not so much a liberal policy position (he was an early opponent to the New Deal) but that regional antipathy to financial interests in the Northeast.
Well, a funny thing has happened in the last 80 years. The Northeast has gone from being solidly Republican to solidly Democratic, meaning that there really are only a handful of Republicans who have constituency ties to the big banks (and plenty more Democrats!). Meanwhile, the rural West remains pretty staunchly Republican -- and anti-bank, as these Crossroads GPS ads suggest. Plus the South, which has always been inherently anti-bank, has become the strongest region for Republican party.
So, is it fair to say that the GOP is still the party of the banks? There are tensions within it, of course, but if you look at the House GOP's vote on TARP, the Tea Party, and ads like the one being run by Crossroads GPS, I'd say the balance of power in the party is now on the side of those who are suspicious of Northeastern bankers.
Jay Cost is a staff writer for THE WEEKLY STANDARD and the author of Spoiled Rotten: How the Politics of Patronage Corrupted the Once Noble Democratic Party and Now Threatens the American Republic, available now wherever books are sold.
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