At the heart of Obama’s reelection narrative is the story that he battled the Big Bad Banks, mostly by passing regulation, and now those banks are retaliating by lining up behind deregulator Mitt Romney.

It’s largely bogus.

Yes, the banks have swung from wildly pro-Obama with their money to wildly pro-Romney, but the bank lobbyists I’ve spoken to have said this has much more to do with Obama’s anti-bank rhetoric than his policy. (The thin skin of these bailed-out millionaires makes you embarrassed for them.)

Bankers aren’t thrilled about everything in Dodd-Frank (though hedge-funds tend to like the rules that will profit them by constraining competition). But on the whole, as with most regulation, the big guys ultimately stand to benefit.

Yesterday Goldman Sachs CEO Lloyd Blankfein said:

If I could push a button and eliminate Dodd-Frank would I do it? No, I would not…. The vast bulk of it is good … some parts go too far.

This is no sudden turnabout from Blankfein. While the bill was on the table in March 2010, Blankfein said “We will be among the biggest beneficiaries of reform.”

A month later, he told the Senate “I’m generally supportive.” A Goldman lobbyist said at the time “We’re not against regulation. We’re for regulation. We partner with regulators.” I listened in on a Goldman conference call that month, and three times, the company spokesman expressed his faith in regulation.


For one, regulation crowds out smaller guys. Michael Hirsch at Newsweek quoted a Treasury official saying:

“we’ve consolidated the position of the five banks that were most central to the crisis,” the former Treasury official says—in other words: J.P. Morgan, Goldman Sachs, Bank of America, Morgan Stanley, Citigroup, along with, currently, Wells Fargo. “In my mind,” he says, “they’ve created six new GSEs,” or government-sponsored entities like Fannie Mae and Freddie Mac.

The Investigative Reporting Workshop similarly cited experts saying new regs would be among the factors crushing smaller banks.

Second, it creates new business for Goldman:

Goldman Sachs Group Inc. said Tuesday it has launched a new business to help clients adapt to changes in trading of derivatives, which have come under regulatory scrutiny for their role in the financial crisis.

Sometimes (read: “basically always”) Obama’s narrative on special interests doesn’t fit the facts.