Break Up the Banks
Barack Obama defeated Mitt Romney by a large enough margin—three percentage points and more than three million votes—that it’s hard to say changing any one thing about the failed Republican presidential campaign would have made a material difference. But a call to break up America’s biggest banks might have been as good a suggestion as any. In one bold, Nixon-to-China move, Romney could have gone a long way toward shielding himself against attacks that successfully branded him a vulture capitalist and Wall Street plutocrat. Indeed, such a policy position would have allowed Romney to paint Obama as the status-quo, crony-capitalist defender of liberal and libertine Wall Street—the inside-Washington politician whose big financial-reform law, known as Dodd-Frank, moved all the pieces but left the mega-banks still far too big for government to let them fail. Romney would have been exactly the Mr. Fix-It, pro-market populist his campaign wanted voters to believe he was.
It is true that advocating such a position in the summer or fall of 2012 would have required a complete flip-flop on the issue. In March, I interviewed Romney and asked whether Washington should heed the advice of, among others, Dallas Federal Reserve Bank president Richard Fisher and do what I’ve just described. Romney quickly dismissed the idea. “I’m not looking to break apart financial institutions,” he said. “I think what caused the last collapse was a convergence, almost akin to a perfect storm, of many elements in our economy and regulatory structure. And if we have in place modern regulation and regulators who are keeping their eye on the ball, there’s no reason to think we will go into another crisis of the kind we just endured as a result of the mortgage meltdown.”
About the Author
James Pethokoukis is a columnist and blogger at the American Enterprise Institute.