Coming as he does out of private equity, Mitt Romney would unquestionably change the tone of the conversation between Washington and Wall Street if he were to beat the odds and win the election in November. After all, he grew up on Wall Street.
Romney counts the bankers, hedge fund honchos and buy-out specialists – whom President Obama often refers to derisively as the ‘Wall Street fat cats’ – among his friends, his former colleagues and, most importantly for Wall Street, among our smartest and most productive citizens.
It was Romney who not only managed Bain Capital for almost 15 years, but actually founded it. He believes that his experience as an entrepreneur – particularly in the field of private equity which demands expertise in both public and private capital markets – is what qualifies him to rescue the country from its current economic malaise.
What that should mean for Wall Street is a president sympathetic to the critical role played by financial professionals in the growth of the world’s biggest and most successful economy. An American exceptionalist as well, Romney believes that one of the things that makes this country great is its leadership in the global capital markets. Having amassed his personal fortune in a highly-competitive business, Mitt Romney is, finally, a pragmatist and not an ideologue.
In his first debate with Obama, Romney conceded that our financial system needs regulation, but his answers to specific questions on the subject strongly suggested that any new market restrictions would have to be based on sound business principles and not be penal in nature.
I would imagine a Romney administration listening carefully to the complaints of the banking industry and then sending a clear message to the commissioners of the SEC and CFTC that they had better have pretty good data or logic to support the specific regulatory initiatives to which the bankers are objecting.
As we now know, U.S. bankers are particularly concerned about Dodd-Frank measures purportedly designed to reduce systemic financial risk which they think will cramp international markets. They are also challenging market conduct rules so vaguely or ambiguously drafted that they will stymie normal financial activity (see Cracking the Volcker Rule).
During his business career, Romney was apparently a straight-shooter, so he is unlikely to be any more lenient toward Wall Street felons than the current administration. What he has indicated, though, is that he would not put up with laws and regulations designed by politicians who do not understand the markets or are just plain mad at their movers and shakers.