The Obama campaign is seizing on the news that financial giant JP Morgan lost billions of dollars trading derivatives with customer funds to attack Mitt Romney for wanting to repeal the 2010 law meant to curtail these kinds of risky bets.
“Rolling back Wall Street reform, as Mitt Romney proposes, would be reckless,” says Obama camp spokeswoman Lis Smith in a statement to TPM. “The law promotes transparency, limits the types of risky investments that can be made with deposits insured by federal taxpayers, and prevents investment losses at one bank from threatening the whole financial system. Returning to the failed policy of letting Wall Street write their own rules would put all of us at greater risk of another financial crisis and leave us vulnerable to another taxpayer-funded bank bailout like the one shortly before President Obama took office.”
Though offered as a response to Thursday’s disclosure of JP Morgan’s huge losses, the statement avoids direct mention of the firm or the incident itself.
Obama has had a strained relationship with Wall Street executives since embarking on reform efforts, and their contention that the administration has scapegoated them and the industry at large has made it difficult for the Obama campaign to secure the level of political contributions from the financial sector that it enjoyed in 2008.
Then again, the administration hasn’t completely won over reformers either. The Dodd-Frank Wall Street reform law contains a provision that, when implemented, will limit the extent to which institutions like JP Morgan can speculate with depositor cash. But critics, and even some supporters of the law, worry that, as drafted, the so-called Volcker Rule would be too permissive and would have failed to prevent the JP Morgan losses.
Brian Beutler is TPM's senior congressional reporter. Since 2009, he's led coverage of health care reform, Wall Street reform, taxes, the GOP budget, the government shutdown fight, and the debt limit fight. He can be reached at email@example.com.