by Jack Minor –
At this week’s Washington Post debate,Republican candidates made it plain they believe the state of the economy is to be laid squarely at the feet of the federal government.
Members of “Occupy Wall Street” have been protesting in Denver, Los Angeles, New York and other cities blaming banks and Wall Street for the economic malaise facing America.
Karen Tumulty asked Rep. Michelle Bachmann, “The banks not only got bailed out by the government: They made huge profits; they paid themselves huge bonuses. Do you think it’s right that no Wall Street executives have gone to jail for the damage they did to the economy?”
Bachmann fired back, stating the wrong people were being blamed. “If you look at the problem with the economic meltdown, you can trace it right back to the federal government, because it was the federal government that demanded that banks and mortgage companies lower platinum-level — level — lending standards to new lows.”
Bachmann continued, “It was the federal government that pushed the subprime loans. It was the federal government that pushed the Community Reinvestment Act. It was Congressman Barney Frank and Senator Chris Dodd that continued to push government-directed housing goals. They pushed the banks to meet the rules. And if banks failed to meet those rules, then the federal government said, “We won’t let you merge; we won’t let you grow.”
Former House Speaker, Newt Gingrich, said the OWS protestors could be broken into two groups, “One is left-wing agitators who would be happy to show up next week on any other topic, and the other is sincere middle-class people who, frankly, are very close to the Tea Party people in actually caring.”
Gingrich went on to say if the protestors wanted to change things they need to hold the government accountable instead of Wall Street. “If they want to really change things, the first person to fire is Bernanke, who is a disastrous chairman of the Federal Reserve. The second person to fire is Geithner. The fact is, in both the Bush and the Obama administrations, the fix has been in, and I think it’s perfectly reasonable for people to be angry. But let’s be clear who put the fix in. The fix was put in by the federal government.”
Gingrich took aim at Congress, “And if you want to put people in jail, I want to second what Michele said: You ought to start with Barney Frank and Chris Dodd. And let’s look at the politicians who created the environment, the politicians who profited from the environment, and the politicians who put this country in trouble.”
Gingrich stated he was calling for a repeal of the Dodd-Frank bill, which places multiple new regulations on community banks.
When asked by Margot Thompson what they would do to enable banks to lend credit to small business owners like her; the candidates again stated they believed it was federal regulations that were causing the credit crunch.
Former Governor, Mitt Romney, said Dodd-Frank will “usher in what will be hundreds and thousands of pages of new regulations. The big banks, the big money center banks in Wall Street, they can deal with that. I spoke with one banker there that said they have hundreds of lawyers working on that legislation and trying to implement it.”
Romney went on to say the regulations will be troubling for small community banks. “For community banks that provide loans to business like yours, they can’t possibly deal with a regulatory burden like that. Then you have inspectors coming in and writing down their assets and saying they’re not worth as much as the bank thought they were worth, and therefore, the banks are unable to lend. Small community banks across this country are starving and struggling because of inspectors that are making their job impossible and because of regulation. That’s fine for the big banks, because they can deal with it. It’s a killer for the small banks.”
Bachmann, who is a small business owner, said community banks will virtually cease to exist if Dodd-Frank is not repealed. “I have spoken to Iowa bankers, and they told me that they are going to see the collapse of community banks, just like Mitt said, all across the state. I talked to a banker in Texas who owns multiple branch banks. He said he’s going to lose 20 million (dollars) on his bottom line this year because of all of the compliance.”
Bachmann continued, “So government is putting a huge layer of regulation on banks. We will literally see thousands of banks close their door. That will be hard for small business owners like you and like me. And so that’s going to hurt real people, and it will lead to job destruction.”
Rep. Ron Paul, who has been an outspoken critic of the Federal Reserve, said repealing Frank-Dodd is not enough. “Dodd- Frank, obviously, is a disaster. It’s estimated it’s going to cost a trillion dollars. Sarbanes-Oxley, which was done by the Republicans; it cost a trillion dollars, too. Let’s repeal that, too.”
The law was touted as a fix for the housing crisis that caused the government to bailout the banking industry. Currently, the full impact of the law has yet to be felt. Of the over 400 new regulations called for in the bill, only a small portion have been written.