James Pethokoukis recommends that Republican presidential candidate Mitt Romney use the following response to the news that JP Morgan lost $2 billion in risky trading:
Today’s news of huge losses on Wall Street highlights the failure of Obama-Dodd-Frank to fix the broken U.S. financial system and prevent a repeat of the financial crisis. As president, I will repeal this well-intended but poorly-executed law. But we must go further. In the past, I have expressed skepticism about the wisdom of breaking up, shrinking, or otherwise limiting the activities of America’s very largest financial institutions. But when a bank like JP Morgan that most experts think is America’s best run can suffer a loss like this, it’s clear changes must be made. It’s time for radical surgery.
With each passing year, the banking industry has become more concentrated and more interconnected. Half of the entire banking industry’s assets are now on the books of five institutions. Their combined assets presently equate to roughly 58 percent of the nation’s gross domestic product. The combined assets of the 10 largest depository institutions equate to 65 percent of the banking industry’s assets and 75 percent of our GDP. Under Obama-Dodd-Frank, the “too big to fail” problem has gotten worse. And we simply cannot afford another bailout or Great Recession caused by a second financial meltdown.
So, I have concluded there is only one fail-safe way to deal with too big to fail. I believe that too-big-to-fail banks are too-dangerous-to-permit. As Mervyn King, head of the Bank of England, once said, “If some banks are thought to be too big to fail, then … they are too big.” I favor an international accord that would break up these mega-institutions into more manageable size. And as president, I will order my Treasury to immediately begin negotiations to that end.
Whole post here.