WASHINGTON — The Republican presidential contenders have begun to coalesce around a rough consensus on financial issues, which rejects not only the record of the Obama administration, but also some key accomplishments of George W. Bush's administration.
It's certainly no surprise that the Republican candidates are loudly criticizing the Obama-era Dodd-Frank Act. And perhaps the candidates' efforts to distance themselves from Bush's record — always with the implicit message that his administration's policies were not conservative enough — shouldn't come as a shock, either, since the candidates are competing for Republican primary votes.
Nonetheless, the candidates' positions on financial policy may prove more important in the 2012 election than in previous campaigns, since the financial crisis and its aftermath have resulted in greater engagement by the public.
"Never before in a political election, especially among Republican voters, were financial regulation and action related to financial regulation as much of a campaign issue and as much of an applause line," said Edward Mills, an analyst at FBR Capital Markets.
The rightward shift on financial policy is being led by long-shot candidates such as Newt Gingrich and Ron Paul. Their appeals to the party's conservative base are exerting a gravitational pull on other candidates, including front-runner Mitt Romney.
At a recent debate in New Hampshire, in response to a question about the recent protests on Wall Street, Gingrich said, "The fact is, in both the Bush and Obama administrations, the fix has been in, and I think it's perfectly reasonable for people to be angry."
Although Paul's views on monetary policy remain well outside the Republican Party's mainstream, his hard-line opposition to bailouts and regulation taps into frustrations with Bush that are felt by many conservative voters.
"I mean, if you look at what we've done as Republicans, we have caused a lot of problems," Paul said in New Hampshire. "To say it's all in these past two years, I mean, I think that is so misleading."
Here are four examples of where the GOP presidential field has turned rightward on financial policy, and in each case, what some of the implications are likely to be.
Dodd-Frank was obviously never popular with Republicans. But on Capitol Hill, calls for a full repeal of the 2010 law haven't amounted to much since the House GOP leadership never signed on to repeal legislation.
It's a different story in the presidential race. Michele Bachmann, Herman Cain, Rick Perry, Gingrich and Ron Paul are all calling for Dodd-Frank's repeal.
While that is a popular approach with the conservative base, it's easier said than done, observers agree.
"So they say repeal Dodd-Frank because it overregulates," said Cornelius Hurley, a law professor at Boston University. "But they never say replace it with what.
"Do you just return everything to the status quo ante of 2008? That's not a very popular position. And that's the burden of governing. You have to come up with solutions. And so far there have not been any solutions that I've seen that have come up in the campaign."
Of the GOP presidential contenders, only Huntsman and Romney are taking positions on Dodd-Frank that are more nuanced than a full repeal.
Jon Huntsman says on his website that he supports a full repeal of Dodd-Frank, followed by an assessment of which parts of the law should be reinstated.
Romney says in his jobs plan that he would repeal Dodd-Frank and replace it with a "streamlined regulatory framework." He states that higher capital requirements are among the concepts in Dodd-Frank that should be kept.
The Troubled Asset Relief Program passed Congress in October 2008 with the support of many Republicans. But since then, opinion on the right has hardened against bailouts.
Some Republican candidates, including Paul and Bachmann, opposed Tarp from the beginning. But others, who supported the Wall Street bailout back near the height of the financial crisis, are on the defensive.
Initially, Romney, Huntsman, and Cain were all supporters of Tarp. Perry has a murkier record. Shortly before Tarp was enacted, the Texas governor signed a letter vaguely urging Congress to take action, without mentioning Tarp specifically, while at the same time he issued a press release in which he railed against taxpayer bailouts.
During debate appearances, only Romney and Cain have mounted any kind of defense of Tarp, and their arguments have been full of qualifications.
"The way it was administered is where it got off track," Cain said during one recent debate. "They were discretionary in which institutions they were going to save, rather than apply it equitably, which is what most of us thought was going to be done."
During the same debate, Romney said, "I'm not interested in bailing out individual institutions that have wealthy people that want to make sure that their shares are worth something. I am interested in making sure that we preserve our financial system, our currency, the banks across the entire country."
John Douglas, a former general counsel at the Federal Deposit Insurance Corp. who is now a partner at the law firm Davis Polk & Wardwell, expressed concern that both Republicans and Democrats are promoting the idea that the era of bailouts is over.
He said that the government's new resolution authority is a very useful tool, but added that the next crisis may call for different responses from the government.
"My only hope is that everyone will be wise, thoughtful and creative, such that our economy can survive," Douglas said in an email. "Boxing ourselves into rigid positions as to the tools we might or might not use does not seem to be particularly helpful."
Sarbanes-Oxley was a bipartisan response to the accounting scandals at Enron, WorldCom, and other corporations. The 2002 law includes provisions that established the Public Company Accounting Oversight Board and required firms to make more disclosures related to financial transactions.
Sarbanes-Oxley passed by overwhelming margins of 99-0 in the U.S. Senate and 423-3 in the House of Representatives.
When Bush signed it into law, he stated, "America's system of free enterprise, with all its risk and all its rewards is a strength of our country, and a model for the world. Yet free markets are not a jungle in which only the unscrupulous survive, or a financial free-for-all guided only by greed. The fundamentals of a free market — buying and selling, saving and investing — require clear rules and confidence in basic fairness."
Since the law's passage, there have been efforts in Congress to repeal or amend certain provisions that impact small businesses. But there has not been any major effort to repeal the law in total.
Gingrich first proposed the law's repeal back in November 2008, and he's carried the issue into the presidential campaign. He's been joined by Paul, one of only three members of Congress who voted against Sarbanes-Oxley.
Huntsman, despite his reputation as the most moderate candidate in the Republican field, is also now calling for the repeal of the 2002 law.
"This hastily written law has only added a massive compliance tax on companies without providing any real measures to prevent corporate fraud, which is still rampant," Huntsman states on his campaign website.
Romney supports a partial repeal of Sarbanes-Oxley to remove what he calls unreasonable burdens on mid-size companies.
Arthur Levitt, a former chairman of the Securities and Exchange Commission during the Clinton administration, said in an interview that repealing Sarbanes-Oxley would amount to politicizing accounting standards, which would be a terrible mistake.
Levitt said that he expects continued jousting over whether smaller firms should be exempted from Sarbanes-Oxley's requirements. "But I doubt that there would be a wholesale repeal," he added.
It wasn't so long ago when Bernanke was still a Republican in good standing.
From June 2005-January 2006, he served as the chairman of President Bush's Council of Economic Advisors. When Bush nominated him to become Fed chairman, his confirmation was so uncontroversial that the Senate didn't even hold a roll-call vote.
By 2010, when Obama nominated Bernanke to serve a second term, he was less popular with conservatives, but he still had the support of more than half of the Republicans in the Senate.
But the presidential campaign has further shuffled the landscape. In August, Perry sparked outrage with his comment that if Bernanke resorted to additional monetary expansion before the 2012 election, it would be "almost treasonous."
Despite the widespread condemnation of that remark, none of the Republican presidential candidates will defend Bernanke's record at the Fed.
Cain has said that he doesn't agree with the actions Bernanke has taken. Romney has vowed not to reappoint the Fed chairman. Gingrich has called Bernanke a "disastrous chairman" and said that he should be fired. Never mind the fact that the president can't actually fire the Fed chairman.
The GOP candidates are appealing to a concern among many conservatives that the Fed's extraordinary actions during the financial crisis will lead to high inflation.
Ernest Patrikis, a partner at White & Case LLP who spent 30 years at the Federal Reserve Bank of New York, shares the concern that the Fed's actions may lead to future inflation.
But he doesn't put much stock in the candidates' promises to get rid of Bernanke.
"The talk about firing Bernanke and these sorts of things to me is silly talk for television," he said.
When the next president, whether it's Obama or a Republican, must decide whether to reappoint Bernanke, factors such as the nation's economic condition and the opinions of market participants at that time will likely have an impact on the decision, he said.
"It will depend on the state of the union," Patrikis said.