James Pethokoukis, writing at AEI Ideas:
[There's] a tremendous and ongoing political problem and political/policy opportunity for Mitt Romney, who made hundreds of millions as a venture capitalist and private equity investor. “Romney’s biggest problem is that, for most Americans, he appears to be a banker,” said Eurasia Group’s Ian Bremmer on Twitter recently. “If I’m advising Obama, that’s my A game. My B game, too.”
And bankers, never the most popular folks, are particularly disliked right now. In addition, the Obama campaign has attacked Romney as wanting to restore the economic policies of George W. Bush, which it says caused the financial crisis in the first place. The winning electoral equation, as they see it: A Romney presidency = George W. Bush’s third term = a return to economic catastrophe.
But if Romney presented an aggressive, free-market, anti-crony capitalist, financial reform agenda — something beyond the fuzzy “Repeal Dodd-Frank and replace with streamlined, modern regulatory framework” pledge on his website — he could demonstrate he’s neither a creature of Big Money nor a Bush clone. Oh, and he would be putting forward some smart policy ideas, too.
Just because Obama attacks “fat cat” bankers in one of his egalitarian rants doesn’t mean that Romney should refuse to excoriate those bailed-out, over-bonused executives when their behavior warrants it. Ever since the days of Adam Smith, believers in the virtues of free markets have known that “people of the same trade seldom meet together . . . but the conversation ends in a conspiracy against the public.” It’s bad enough when these conspiracies aim to fix prices on, say, construction projects. But when the conspirators are bankers who label themselves “dudes” and “big boys,” and promise each other bottles of Bollinger for manipulating prices, and when the price they fix is the interest rate that theWall Street Journal estimates governs $800 trillion of loans and derivatives worldwide, including almost one million U.S. home loans indexed to Libor carrying an unpaid principal balance of $275 billion, we have an assault on the heart of capitalism, not to mention a potential bonanza for class-action lawyers. The CEO of one multinational bank told the Economist, “This is the banking industry’s tobacco moment,” referring to that industry’s $200 billion claims payout.
That’s what the bankers’ fixing of the so-called Libor (London InterBank Offered Rate) is all about. Don’t worry about the details. Know only that the bankers manipulated the global rate to turn a market into what the Bank of England calls a “cesspit” in order to enhance their profits; that Barclays has agreed to settle for a fine of $450 million and demanded the resignation of its American-born president, Bob Diamond; and that the British authorities are all over other banks like a tent.
And where is Mitt Romney, with a golden opportunity to show that he is outraged at this latest effort of the banking community to appropriate to itself a still larger share of the national income, to show that he believes in a market manipulated neither by government bureaucrats nor by private bankers? It’s not banker-bashing to criticize bankers when they deserve it. And it’s not bad politics when that criticism lets Main Street know that Wall Street does not own this candidate. The Manhattan Institute’s Nicole Gelinas said it best: “When a bank egregiously breaks the law, it should run the risk of a criminal conviction.” Why not a simple comment from the candidate that bankers’ “monkeying with the Libor this way for their own financial benefit is outrageous”? Alas, that statement came not from Romney but from Barney Frank, who predictably sees congressional hearings and more regulations as the solution.