Republicans in the House decided yesterday that it might not be the best time to work on repealing parts of Dodd-Frank, following JPMorgan’s ugly $2 billion loss. Agriculture Committee Chairman Frank Lucas insisted that the bills in question were completely unrelated to the JPMorgan mess, but to “ensure there are no unintended consequences of the legislation,” it’s better to just hold off on a meeting previously planned for tomorrow. “As always,” Lucas said, “Washington has a tendency to overreact.” Is that so?
That sounds like the view of Mitt Romney’s campaign, at least. Yesterday, when asked about JPMorgan, Romney adviser Eric Fehrnstrom said “we don’t want to punish companies.” Although he insisted Romney is in favor of some Wall Street reform, Fehnrstrom tried to explain that regulation “should not be cumbersome and it should not act as a wet blanket or a damper on the economy.” This is how it’s supposed to be, he said: “There was no taxpayer money at risk. All of the losses went to investors, which is how it works in a public market.”
The Wall Street Journal reports that one of the bills in question would repeal the part of Dodd-Frank that requires banks to split trading desks that work with derivatives swaps from the rest of their federally backed business. “Two bills reported out by the Republican majority on the Financial Services Committee in their current form would re-deregulate derivatives in ways that would again make them a threat to our economy,” said Barney Frank in a statement. Although the rule changes had no real chance in the Senate, JPMorgan or not, the sudden shift in the House’s priorities is indicative of the effect Dimon’s screw-up could have on financial reform, at least temporarily.