Over at the conservative American Enterprise Institute blog, James Pethokoukis has an idea that could be a total game-changer for Mitt Romney: he should come out for breaking up the five biggest banks, which control about 70% of all U.S. assets. This would be a move supported by discerning liberals and conservatives–as I wrote yesterday, Jon Huntsman proposed it during the primary campaign; Paul Volcker favors it, too. And out in America, where Big Wall Street is about as popular as Big Government, this would be very popular with the independent voters who will decide this election…and it would flank President Obama, whose failure to either reform the big banks or indict a single banker for the fraud that led to the Great Recession has been a real disappointment. It would certainly change the nature of the conversation, return the debate to the economic issues that Romney wants to run on–and, for once, establish him as a creative thinker. Which is, I suppose, precisely why he won’t do it.
Update: Several readers have raised the question of how you could break up the big banks. It’s a terrific question–and I’m not sure that I know the best answer. I do know one thing, though: It would have to be done via legislation, rather than regulation. Huntsman’s plan would impose a confiscatory fee on banks over a certain size, forcing them to divest. Former Delaware Senator Ted Kaufman and others favor a more straightforward approach: an updated version of the Glass-Steagall law which separated commercial banking from investment banking, and kept the animal passions of Wall Street under control from the Great Depression to the late 1990s, when it was supplanted by Bill Clinton’s unfortunate deregulation. There may be other ways as well–and none of them would have an easy go of it in the Congress, which has been bought and paid for–in the past, at least–by the overwhelming power of the banking lobby.
But with Obama on the record opposed to breaking up the big banks–and favoring the Rube Goldberg Dodd-Frank contraption–we need to know more from Romney: He opposes Dodd-Frank. Fair enough. But he’d replace it with what? Glass-Steagall? Some other regulatory apparatus? Nothing? I’ve long wanted to ask Romney this question, but–of course–he won’t grant me an interview.