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Top GOP donor calls on Romney to get tough on banks

August 16, 2012|By Kim Geiger
  • Members of the crowd show their support for Mitt Romney as his running mate, Rep. Paul Ryan, speaks at a campaign event in North Canton, Ohio.
Members of the crowd show their support for Mitt Romney as his running mate,… (Jeff Swensen / Getty Images )

WASHINGTON -- A top Republican donor and outspoken critic of the Dodd-Frank financial reforms has called on Mitt Romney to pursue tougher regulations and force big banks to be more transparent.

Paul Singer, a billionaire hedge fund manager and chairman of Elliott Associates, recently raised the issue with Romney officials, according to the Financial Times, when he sent the officials his firm’s quarterly investor letter, which argues that a financial “black hole” looms without tougher controls on banks.

The letter states that Dodd-Frank is “ill conceived” and complains that the law does not demand the level of transparency that is necessary for creditors and counter-parties to understand “how their claim on specific vehicles in a complicated capital structure will be treated in the liquidation process.”

Romney opposes Dodd-Frank, but he has been vague in offering an alternative. He has pledged on his website to “tear down the vast edifice of regulations the Obama administration has imposed on the economy” by, among other things, repealing Dodd-Frank.

“Greater transparency for inter-bank relationships, enhanced capital requirements, and provisions to address new forms of complex financial transactions are all necessary elements of effective financial reform,” says the economic plan posted to Romney’s website. “But these concepts must be translated into law in a way that creates a simple, predictable and efficient regulatory system appropriate for our dynamic economy.”

Singer told the Financial Times that he expects many on Wall Street to oppose his proposed reforms, which include more-stringent capital requirements.

“They will likely lobby against the fixes that I believe are necessary,” Singer said. If such fixes do not occur, he said, “the next financial crisis could be similar to the last one, but perhaps more sudden and intense.”

This is not the first time Singer has advocated policies that are not popular with Republicans.

He recently formed American Unity PAC, a “super PAC” that aims to nudge Republican candidates into backing same-sex marriage. He gave $1 million to the committee, which plans to participate in three House races. Those races, according to Politico, feature GOP members whose past positions on gay rights issues suggest they might be willing to support gay marriage. The three Republicans are Rep. Richard Hanna of New York, Rep. Judy Biggert of Illinois and California Rep. Mary Bono Mack of Palm Springs.

The group is focused on Republicans in competitive races who are likely to appreciate the super PAC’s help.

In addition to the new super PAC, Singer has given $1 million to Restore Our Future, a super PAC backing Romney, as well as a number of other Republican candidates and GOP committees.

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kim.geiger@latimes.com

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