Just the Facts: A Weekly Report on the Presidential Candidates

Spotlight on Reform President Obama sides with Main Street not Wall Street, vowing that taxpayers won’t pay for ‘Wall Street’s irresponsibility.’ Reforming Wall Street has been touted as one of President Obama’s greatest accomplishments.1 In 2010, President Obama said, “it's important that we not lose sight of what led us into this mess in the first place… banks and financial institutions took huge, reckless risks in pursuit of quick profits and massive bonuses. When … this binge of irresponsibility was over, several of the world's oldest and largest financial institutions had collapsed…. Markets plummeted, credit dried up, and jobs were vanishing by the hundreds of thousands each month.”2 In the aftermath of the financial crisis, President Obama took the reins of a “failed regulatory system” and signed into law reforms that responded to the loss of “trillions of dollars in household wealth and … over 8 million jobs.”3 The Dodd‐Frank Wall Street Reform and Consumer Protection Act of 2010 “tightens capital requirements on large banks and other financial institutions, … mandates that large banks provide ‘living wills’ to avoid chaotic bankruptcies, limits their ability to trade with customers’ money for their own profit, and creates the Consumer Financial Protection Bureau… to crack down on abusive lending products and companies.”4 According to President Obama, “We don't want [the financial sector] taking risks where eventually we might end up having to bail you out again... what makes us the best financial industry is transparency, accountability, rules so that small investors feel like if they put their money into Wall Street, it's not going to suddenly just disappear.”5

******* Romney resists Wall Street reform; as JPMorgan risks—and loses—billions, he contends, ‘that’s the way America works.’6 Last week, JP Morgan Chase revealed that in the span of just a few weeks it had lost $3 billion—a still‐increasing figure.7 Jamie Dimon, JPMorgan’s CEO, called his company’s mistakes “egregious,”8 “stupid,” and “sloppy,”9 admitting “regulators should look at something like this—that's their job.”10 The 2010 Dodd‐Frank Wall Street reform bill includes a section, the “,” that would prevent the type of trading that led to JPMorgan’s crisis.11 However, implementation of the law has slowed due to extensive lobbying from Wall Street and Republican opponents. Romney now spearheads much of the opposition. Despite looming reverberations of the 2008 crash and JPMorgan’s disaster last week, Romney continues to support the dismantling of recent financial services reform. In 2011, he told a group of businessmen that “the extent of regulation in the banking industry has become extraordinarily burdensome,” and that “I’d like to repeal Dodd Frank.”12 Romney also admitted that he would “basically repeal” reforms passed after the scandal.13 Romney’s campaign has avoided questions on the issue and released a statement saying only that “as president, Governor Romney will push for common‐sense regulation that gives regulators tools to do their jobs, and that gives investors more clarity.”14 To date, Romney has raised almost $375,000 from employees at JPMorgan, almost five times as much as President Obama.15

NEA Believes The country’s leadership should focus on Americans who work hard and play by the rules, not millionaires and corporate special interests. The manner in which Wall Street has conducted itself is an affront to Main Street, which is still suffering as families continue to struggle to find work and feed their children. According to a 2011 U.S. Senate report, “Investment banks can play an important role in the U.S. economy, helping to channel the nation’s wealth into productive activities that create jobs and increase economic growth. But in the years leading up to the financial crisis, large investment banks designed and promoted complex financial instruments … that were at the heart of the crisis.”16 It is not unreasonable, three years after the financial meltdown and a taxpayer bailout, for the country to expect more from Wall Street. As President Obama has said, “The American people have paid a very high price. We simply cannot return to business as usual.”17

1 Obama’s Top 50 Accomplishments, The Washington Monthly, 4/2012 2 Remarks by the President on Financial Reform, The White House, 1/21/2010 3 Wall Street Reform, The White House, accessed 5/18/ 2012 4 Obama’s Top 50 Accomplishments, The Washington Monthly, 4/2012 5 Obama says JPMorgan loss shows need for Wall Street reform, Reuters, 5/14/2012 6 Romney Calls for Caution on Regulations After JPMorgan Loss, Bloomberg, 5/17/2012 7 JPMorgan’s Trading Loss Is Said to Rise at Least 50%, New York Times, 5/16/2012 8 Romney Says Regulators Must Be Cautious After JPMorgan Loss, Bloomberg, 5/16/2012 9 JPMorgan’s Trading Loss Is Said to Rise at Least 50%, New York Times, 5/16/2012 10 JPMorgan roils campaign for Obama, Romney, The Examiner, 5/12/2012 11 Volcker Rule Proponents Say JPMorgan Loss Bolsters Case, Bloomberg, 5/11/2012 12 Romney would repeal Dodd‐Frank law, Boston Globe, 8/24/2011 13 Romney Says Regulators Must Be Cautious After JPMorgan Loss, Bloomberg, 5/16/2012 14 Donors tied to banking desert Obama for Romney, Boston Globe, 5/16/2012 15 JPMorgan employees give to Romney, Obama, USA Today, 5/15/2012 16 Wall Street and the Financial Crisis: Anatomy of a Financial Collapse, U.S. Senate Committee on Homeland Security & Governmental Affairs, 4/13/2011 17 Remarks by the President on Financial Reform, The White House, 1/21/2010