For Six Minutes, Wall Street Was On the Edge of Its Seat
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For about six minutes during Wednesday night's presidential debate, President Barack Obama and challenger Mitt Romney oratorically wrestled over Wall Street regulation.
The exchange was a surprise. What to do with Wall Street hasn't been a pressing issue in the campaign. And although Occupy Wall Street protests helped bring attention to income inequality, the movement's tandem cause—the influence of big banking interests in Washington—had stayed largely on the back burner.
Last night, however, it was briefly front and center. Each man got off a zinger. "Anybody out there think that the big problem we had was that there was too much oversight and regulation of Wall Street?" President Obama said sarcastically, "Mitt Romney is your candidate."
Mr. Romney offered a couple of rebuttals about the regulatory overhaul signed by the Democratic president. "It wasn't thought through properly," the Republican nominee said in a deadpan. Dodd-Frank's "too-big-to-fail" provision was, Mr. Romney said incredulously, "the biggest kiss that's been given to New York banks that I've ever seen."
Unfortunately, that skirmish was about all we got. What could have been a watershed moment about how each candidate would tackle Wall Street's outsize influence on Capitol Hill, the revolving doors, the $400 million a year spent on lobbying by financial interests and so on ended when moderator Jim Lehrer changed the subject.
If you think six minutes out of the planned 90-minute debate is appropriate, then consider this: Since last presidential election, we've endured the worst stock market, housing and economic crash since the Great Depression. And Wall Street was in the middle of it all.
The irony, of course, is that every economic concern that received the lion's share of airtime in the debate—jobs, the deficit, the struggling middle class—is a result of a financial system that gorged on easy credit and a lack of controls. While Wall Street isn't entirely to blame, it at least deserves some of that yellow police tape that circles the scene of the crime.
Three former inside-the-Beltway insiders, in books published during the last six weeks, have launched broadsides at the financial lobby and government. The approaches are different, but it is the same old story: Wall Street influenced a government bailout on the industry's own terms and followed up by blunting regulatory reform aimed at preventing another crisis.
Sheila Bair, who led the Federal Deposit Insurance Corp. during the financial crisis, sounds the most alarmed. In her book "Bull By the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself," she has tough words for the Treasury Secretary and then-chief executives of Citigroup Inc. and Bank of America Corp.
In a statement, Citigroup said Vikram Pandit's record as CEO "speaks for itself." Kenneth Lewis, the former chief executive at BofA couldn't be reached for comment. Treasury Secretary Timothy Geithner declined to comment through an agency spokesman.
None of the books by Ms. Bair, former Troubled Asset Relief Program inspector general Neil Barofsky and Jeff Connaughton, the former chief of staff to Sen. Ted Kaufman, a Delaware Democrat, are in the Top 50 in Amazon.com's bestseller list. Ms. Bair was at No. 117 Thursday morning, trailing singer Cyndi Lauper's autobiography and a cookbook by actor Stanley Tucci.
"I would've thought the last crisis was devastating enough," said Mr. Connaughton, who wrote "The Payoff: Why Wall Street Always Wins." He partly blames the public and political ambivalence on the stock-market rally. After falling 50% from its high in Mr. Obama's first term, the Dow Jones Industrial Average has more than doubled since then and trading near December 2007 levels.
In addition, Wall Street has just finished its most profitable yearlong stretch since 2006. The industry earned $63 billion during the last four quarters, according to Bloomberg. Unfortunately, blank ink often is translated into a sign of the financial system's health.
Perhaps the biggest reason Wall Street got just six minutes of discussion in Wednesday night's debate is that neither Mr. Obama nor Mr. Romney sees any problem.
"Both candidates supported bailing out the banks," said Mr. Barofsky, who wrote "Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street." "Both support allowing them to maintain their breathtaking size, power and influence. Neither advocates breaking them up."
Write to David Weidner at david.weidner@dowjones.com
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