Wendy Long: What Does The GOP Senate Candidate Want To Do With Banks?
Wendy Long, the Republican Senate candidate who has quite a few ideas for your vagina, also has some ideas for banks.
Writing about financial reform in a Wall Street Journal op-ed, "A Smarter Approach to New York's Banks," she takes on political rival Sen. Kirsten Gillibrand's "punitive" view on financial regulation.
Long says that four proposals for reform have come out since the 2008 financial collapse and that "only one will work, and it's not the one imposed by the 2010 Dodd-Frank law."
No, Long says to breaking up the banks, as per Ohio's Sen. Sherrod Brown: "Dividing J.P. Morgan Chase and other megabanks into pieces would cause them to focus on restructuring their own businesses, not on helping clients grow. And if U.S. banks are split up, foreign competitors will take advantage."
No, Long says to separating investment and commercial banking, "Runs on investment banks are more likely than bank runs. Diversification of liabilities and FDIC-insured deposit funding are not the problem but rather a source of strength."
No, Long says to "aggressively regulating the financial sector," which is what Senators Chuck Schumer and Gillibrand propose:
"It is harder to understand why the two senators from New York would want to be a party to the Empire State's downfall as the world's financial capital, which is the direction Dodd-Frank is taking us. They apparently feel politically safe enough to indulge their big-government fantasies at the expense of tens of thousands of New Yorkers. They fear nothing from constituents whose financial sector jobs will disappear if Dodd-Frank goes forward.
Consider the so-called Lincoln Amendment, set to take effect in 2013, which withholds FDIC insurance and Federal Reserve borrowing from derivatives dealers. It forces banks to "push out" many derivatives activities to a separate affiliate.
Unless the Lincoln Amendment is repealed, all the New York banks that deal in derivatives -- which employ thousands and contribute significantly New York's tax base -- will be forced to create new entities requiring separate capitalization, and to move many derivatives activities there. For the domestic money-center banks, the cost of separate capitalization may lead to job cuts. The big foreign banks may respond by moving jobs back to their home countries."
So, what does Ms. Long suggest?
She thinks everything will be OK if we just "enforce free and fair markets by catching bad guys."
Long's peachy proposal hinges, in part, on this reasoning: "If you asked New York Police Commissioner Ray Kelly how to fight a crime wave, he wouldn't say, 'take officers off the beat to write regulations on 1,000 pages of a new criminal law.'"
While Long is right -- Kelly probably wouldn't do that.
And while we're not financial experts -- and we're not saying what should be done with our messy, messy markets -- we do know a thing or two about examining arguments, and it sure seems like this kind of comparison is a bit of a stretch.
Long, seeing as how she wants to be a lawmaker, should know that the relationship between regulation makers and regulation enforcers is quite different from the relationship between a street cop and his commander, so making this kind of analogy seems a little off.
Also unclear: She doesn't fully prove that the existing laws are sufficient, and Long's brandying a handful of recent headlines where current regulations weren't enforced just isn't enough.
And, she appears to assume that adding to or amending them will somehow prevent regulators from doing their job.
Long ultimately decides that "the role of government is to set clear, simple rules and catch bad guys to keep markets fair, free and flourishing."
All that sounds fine and dandy.
But until we're presented with more specifics -- which we're not here -- it doesn't sound like she's giving us much to work with.
And, for context's sake, another Long WSJop-ed from April makes pretty much the same claims, but the meat of that essay seems to be that some un-specified regulations are OK, that some new rules should be on the "chopping block," and that the U.S. only needs one financial regulation agency.
We reached out to Long's campaign to see if she had anything to add. We'll update if we hear back.
Follow Victoria Bekiempis @vicbekiempis.
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