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Why Paul Ryan Is Bad News for Bankers

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When bankers heard over the weekend that Republican presidential nominee Mitt Romney had selected Paul Ryan as his running mate, most likely cheered the news. The Wisconsin congressman is, after all, the Capitol Hill antithesis of Barney Frank. He's the Republicans' standard-bearer for limited government in all its forms and has gone into greater depth than anyone else in his party in laying out a plan for limiting it.

Given the mountain of regulations that bankers are struggling to digest under Dodd-Frank (which Ryan voted against), that message is undoubtedly music to the ears of many financiers. It also explains why Ryan has had strong financial backing from banking and insurance lobbyists as a Wisconsin congressman and head of the House Budget Committee.

Yet for bankers there's a lot about Ryan's selection to dislike. On the fringe, for those who believe healthy banks have suffered for the sins of their irresponsible, bailed-out brethren, there's Ryan's grudging support for the Troubled Asset Relief Program. In explaining his backing for Tarp, even as two-thirds of his Republican colleagues initially rejected it, Ryan argued that if the financial system had been permitted to collapse in 2008, "we would have had a big-government agenda sweeping through this country so fast that we wouldn't have recovered from it."

The Jamie Dimons of the world will be no more thrilled by Ryan's support for a Volcker Rule that effectively resurrects Glass-Steagall. "If you're a bank and you want to operate like some nonbank entity like a hedge fund, then don't be a bank. Don't let banks use their customers' money to do anything other than traditional banking," Ryan said last year.

More important, on the big-picture stuff, Ryan's supporters and detractors agree on one thing: His presence on the GOP ticket is going to further polarize the country, assuming that's possible.

That means in the run-up to the November balloting the story line is clearer than ever. Obama-Biden will portray themselves as the champions of working families and will position their rivals as conniving to give the rich more tax breaks while depriving the rest of us of Medicare and Social Security. What Ryan adds to the ticket, in the words of Obama campaign aide David Axelrod, is a "right-wing idealogue."

The Romney-Ryan campaign, by contrast, will try to cut a profile of favoring American enterprise, small government and deficit cuts while painting its Obama-Biden antagonists as having failed to revive the economy and pandering to big labor.

It's just one pundit's opinion (mine), but Romney's bid to shake up the presidential race by selecting a young, polarizing firebrand doesn't seem to bode well for the GOP or its financial industry backers. Adding an ideologically extreme running mate to energize the base certainly didn't work out too well for John McCain when he hitched up with Sarah Palin four years ago.

Instead of a sign of strength, Romney's selection of Ryan appears to be a recognition by the former turnaround artist that his own campaign is lagging in the polls and itself needs a turn-around, as The New York Times' Nate Silver points out.

It's easy to understand why Romney is running scared. Most polls indicate the race is close but was leaning marginally in President Obama's favor before the Ryan selection was announced, with relatively few undecided voters to woo. So yes, Ryan will fire up the already converted for a few days or weeks. But they were going to vote for Romney regardless. The ones Romney needs to win over are the voters whose rather conflicted attitude was summed up in a quote I recall hearing from a rank-and-file voter in the last election: "I don't want the government messing with my Social Security!"

Once the initial hoopla passes, Ryan's addition to the GOP ticket appears likely to harden attitudes, conflicted as they are, but do little to move the needle that now indicates Obama's chances of getting reelected in November are better than even. For bankers who think a Ryan in the White House would be great for the industry, there's always 2016.

Neil Weinberg is the editor in chief of American Banker. The views expressed are his own.

 

QUESTION: Do you think Paul Ryan will change the outcome of the presidential election? Share your views in the Comments box below.

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Comments (31)
I found the article to be fair, but am no fan of Mr. Ryan. For all his talk of fiscal conservatism, he voted for all the unfunded Bush spending programs (tax cuts, Tarp, Medicare Part B, etc.). During his lengthy tenure in the House, he has never introduced any meaningful legislation. His social conservatism wrankles me, as I do not feel Congress has any business legislating against contraception or LGBT issues. He proposes draconian cuts to all discretionary spending programs, cutting them to just 3.75% of GDP, which is less than we pay now just for defense. What's more, he proposes some 20.0% in additional tax cuts. Under his proposed budget, it is estimated that Mr. Romney would pay less than 1.0% federal income tax on his 2010 income. His plan for Medicare proposes nothing to help curtail the rising costs. It simply cuts benefits. With no cost containment, the block grants he proposes cannot hope to keep up as recipients age. It is my opinion that he is a liability to Mr. Romney. Worse, though, is the fact that he is a bigger liability to the United States, as his votes have already contributed to our massive deficit. His proposals could only make things worse.
Posted by MJR | Thursday, August 16 2012 at 3:35PM ET
Mr. Blackwell,

I think your readers have a keener eye for good analysis than you do. Mr. Weinberg's article is baffling and he uses poor logic to draw his conclusion. He starts the article by pointing out Mr. Ryan's backing of TARP and the Volcker Rule, both received stronger backing from Pres. Obama and his party than the GOP. Mr. Weinberg then criticizes Ryan as being polarizing and a "right-wing ideologue". How does someone go from having the same views as the democrats to a right-wing extremist in two paragraphs?
Posted by LRSmith | Saturday, August 18 2012 at 5:27PM ET
Neil Weinberg has written well and soundly from his perspective. While I disagree with some parts, I do respect his thoughtfulness and care not to become extreme. There are part to his narrative where he comes close to
Countering his own previous statements. He probably needs someone with an objective and logical slant in the other direction to iron out some seeming indecision in his very intelligently created Post.
Posted by hedger | Saturday, August 18 2012 at 8:03PM ET
Mr. Weinberg Have you seen the latest Newsweek article on the President??
Get a clue when liberal magazines post this most thorough beating of the president that I've ever seen! perhaps you want to re-access you projections!
Posted by hedger | Monday, August 20 2012 at 4:51PM ET
Paul Ryan may be a conservative, but at least he's not a liberal left winger who continues to apply the same failing government spending policies which have buried our country with unsustainable levels of never ending debt and government bureaucracy.

Yes he, along with Judy Biggert, (my misguided Republican Congressional Representative from the western suburbs of Chicago), both mistakenly supported TARP and they were wrong to do that, truth be told. Any sensible politician must now admit that TARP only perpetuated our TBTF/TBTM failed, moral hazard banking model as evidenced by the rapid growth of our toxic trillion dollar banks who refuse to materially lend more than 1% of their balance sheets to our critically important, job creating small businesses.

However, to say Ryan is "a polarizing firebrand" or "ideologically extreme" is simply not accurate. Irrespective of the fact that liberals use that kind of inflammatory language to fan the flames of political divisiveness, it fails to describe Ryan's true ideology.

Ryan, like Judy Biggert, got duped into TARP by corrupt big bank lobbyists, Wall Street mavens and our former Treasury Secretary who initially mis-interpreted our banking problem as a liquidity crisis and was later forced into re-characterizing it in the form of an ineffective, TARP capital solvency fix.

Yes, Ryan and Biggert were both wrong for supporting TARP, as I vehemently argued in Biggert's Westmont office to no avail with her Chief of Staff. Just because they got in line with the democrats to bail out the big banks does not make them right wingers. If anything, they voted more like democratic bureaucrats then "polarizing" or "ideological" right wingers.

What needs more light is Ryan's detailed, articulate style and focus on supporting job's producing, small business. Trickle down economics only works in this economy if tax cuts and less regulation makes it into the hands of job creators, not jobs exporting multinational corporations or TBTF/TBTM banks refusing to materially lend to small business.

Coming from the land of cheese could only help the Romney/Ryan team relate more to middle america and small business. Romney would be wise to promote Ryan's connection to mid-west values. Ryan's constituents in Wisconsin have seen first hand what bloated government bureaucracies have done to destroy healthy job growth.

The reference to Palin pales in comparison to Ryan's articulate and concise style. There simply is no relevant comparison between these two politicians. Ryan's vision will connect more with middle class voters once they stop and actually listen to what he has been saying about how we can create jobs.

Yes, even my liberal democratic cheesehead neighbors will listen and possibly vote for Romney as long as Romney stays the course in the direction of Ryan values. After all, its all about jobs and Ryan has articulated more meaningful plans to support jobs producing small business than any polarizing and pretentious failed jobs plan that has come out of the liberal Whitehouse for four very long and painful years.

Give Ryan a listen, what do we have to lose...other than the opportunity to create more jobs?

Dale R. Kluga
President
Cobra Capital LLC
Darien, Illinois 60561
www.cobrallc.com

Solutions that work(R)
Posted by d. kluga | Wednesday, August 22 2012 at 3:27PM ET
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