President Obama had a famous falling-out with Wall Street after Democrats passed the sweeping financial reform bill, Dodd-Frank, and Obama bruised some egos with tough language about "fat-cat bankers" hurting the economy. Still, more than three years after he was sworn in, no top bankers are in jail, by one count financial-fraud prosecutions are down, and now JPMorgan Chase just lost a staggering $2 billion on the type of risky credit default swaps that helped drag the country into this financial hole in the first place. Here are four ways JPMorgan's spectacular flub could damage Obama politically:
1. This feels like déjà vu all over again
Obama administration officials "make a nuanced and largely credible case" that they got the toughest law politics allowed in 2010, and it helped keep JPMorgan solvent, says Ben White at Politico. "But average voters don't attend Commodities Futures Trading Commission hearings or read comment letters on complex proposals like the Volcker Rule provision in Dodd-Frank that is supposed to ban banks from making such huge bets." They read newspapers and watch TV, and when they see a another giant bank suffering a "headline-grabbing, casino-style loss," well, that sure "looks like 2008 over again."
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
SUBSCRIBE & SAVE
Sign up for The Week's Free Newsletters
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Latest Videos FromThe Week
2. It doesn't help Obama look tough on Wall Street
Voters want tougher financial rules that will keep a 2008-style meltdown from happening again, but they're far from "convinced the Dodd-Frank financial reform law completely fixed the problem," says Adam Sorensen at TIME. The law is still being implemented, but critics on the Left say it doesn't go far enough, critics on the Right say it goes too far and is hurting economic growth, and there's an odd cross-ideology consensus growing that Obama missed the boat by failing to break up the big banks like JPMorgan. All that makes it "nearly impossible for Obama to run as the president who got tough on Wall Street," says CNN's Jack Cafferty.
3. And it actually highlights his ties to Wall Street
The president and Wall Street may be barely on speaking terms these days — JPMorgan CEO Jamie Dimon, a big Obama backer in 2008, said Sunday he's "barely Democrat" now — but a new ad from conservative group American Future Fund is still trying to hang Wall Street around Obama's neck. And rightly so, says Moe Lane at RedState. Obama criticizes the influence of Big Finance in campaigns, but he still attended a large fundraiser Monday with Blackstone president Tony James. I don't "have an issue with Wall Street donating money to candidates. But Barack Obama does," so this gets hypocrisy points, too.
4. The economy is back in the spotlight in the campaign
Obama's opponent, Mitt Romney, has even closer personal and professional ties to Wall Street, and wants to repeal Dodd-Frank, says Politico's Ben White, so that's actually a plus for Obama. But "re-election campaigns are referendums on a president's job performance," and the conventional wisdom is that any day the campaign focuses on the still-struggling economy is a win for Romney.
