Governor Buddy Roemer on Finance Reform and the Hunt for a Presidential Nomination - Without Corporate Cash
On how his experience in the banking industry informs his perspective on finance:
“I formed a different kind of bank. Both banking in general and the kind of bank I formed have really affected my thinking over the last 10 years. I'm an economics major in college and I have a masters degree in banking and business, and that affected my thoughts for a long time.
But the real world of banking has had a decided shift in some of my beliefs. For example, my bank is a small bank–-it has about $700MM dollars in assets. We have about $500MM dollars in loans. We service small businesses--we're not a retail bank. We didn't receive any bailout money, although we were eligible for it. We didn't foreclose on a single homeowner; we didn't shut down a single business.
One thing I have learned about the banking system is that there is a stark difference between a community bank and a Wall Street bank, an investment bank. These banks are different. In the old days, these banks could not merge--a commercial bank could not be an investment bank. That limited the size and power of investment banks. It also improved their safety.
In 1998 and 1999, when Bill Clinton was president, he and Congress eliminated Glass-Steagall--a 70-year law put in during the Great Depression--which kept investment banks from becoming commercial banks. They couldn't be the same. They had to be different entities because they were different risks. Well, the bankers were greedy on Wall Street, and they payed a lot of money into the campaign coffers of the president and members of Congress, and guess what? They eliminated Glass-Steagall.
Guess what happened eight years later? The banking system collapsed. The big bankers, trying to grow at any cost, took risks that a prudent banker would not take. It's called "moral hazard" in the business. And so banking didn't divide any more between commercial banks and investment banks; it divided between giant mega-banks on Wall Street and all the other banks in America. It's a conflict that exists today, it has Too Big to Fail as part of its premise, it has lower capital ratios for the negative banks, and it killed Glass-Steagall. It was stupid, it was economically punishing to America--and particularly small business--and it was fed by greed: greed of Wall Street and greed of the Washington politicians. They screwed the average American.”
How far would a reinstatement of Glass Steagall go in solving America's banking issues?
“It would go a long way. More is needed. I think we need to have capital ratios increase as the size of a bank increases. There is greater risk to larger banks [because] there are no small accidents or mistakes there. They could tumble the entire system. Under current law and current practice, capital ratios go down as a bank gets bigger.
I would reinstate Glass-Steagall as my first priority, I would increase capital ratios as my second priority, and Too Big to Fail would be eliminated.”
How do you counter arguments that increasing capital ratios would slow credit growth and thereby hurt the economy?
”It's not a good argument. How [much] slower can we get? They had it wide open. Capital ratios went down, Too Big to Fail was the law, and the whole system was paralyzed [as a result]. One argument I've heard on capital ratios and Glass-Steagall is that they will make us unable to compete in the world marketplace, [that] we won't be able to compete with European banks who don't have these restrictions. Nonsense. It's a system that's out of control. It's a system that keeps making the same mistakes over and over again.
Here's my argument: the best way to compete is relationships. The best way to compete is to eliminate fat, be honest with your clients, and to have transparency in the way you operate your bank. Look at what happened on Wall Street. Goldman Sachs went to the Senate Banking Committee and testified under pressure that they had lied to their own customers and had hidden it from the regulators, from shareholders, and from the Banking Committee. It's an industry that has been corrupted by its power and its influence.
I'm a conservative. I think regulation ought to be as little as possible, but I think we need a speed limit on the highway. I think we need to do bank reform, and not allow our Congressmen and our president to take money from the banks. If you're going to reform them, reform them--but quit taking their cash while you reform them. It doesn't work.”
What do you identify as the failures of those who have gone before you in attempting to reform campaign finance and how will you address those failures?
I thought John McCain particularly did a good job of making it an issue. John's problem was that he wasn't able to be free of the money. He took PAC money in large sums. He took contributions from those [interests] that had to be regulated. At the end of the day, to try to get elected, he had to take the money.
It was a mistake; I argued against it. People will tell you that I was basically alone in that campaign. I just felt that the way to be president and the way to serve America's interest was to vote against the bank bailout that President Bush asked John to vote for and Barack Obama did vote for. I asked John to consider not voting for it, to actually put the interest of the American people first. That's the change that makes me different.
There's one thing on which I will not budge: I think this country is in trouble, I think it needs a president free to lead, and I think you've got to practice what you preach. I do not take PAC money. I have never taken PAC money. As a Congressman, they laughed at me, [but] I got re-elected every time. Running for governor of Louisiana, basically a corrupt state, I didn't take the oil money, I didn't take the chemical money, I didn't take PAC money.
There's nothing wrong with America that a president free to lead and a Congress committed to the people--and not the special interests--can't change.”
On the Occupy Wall Street Movement:
I love it. I spent three and a half hours there walking and listening. I didn't give a speech. I was a Republican, [so] they booed and hollered, and then they started talking to me. The number one issue [on their agenda] is one that I endorse wholeheartedly, and that is that something is wrong. The taxpayers are paying for it. I don't know if Occupy Wall Street is in the right place – I think it it ought to be Occupy Washington, D.C. But they've got it right--they're the same place, they're connected at the hip. You know where Congressmen and presidents get their money? From the wealthy 1% and from Wall Street. Look at the records: the biggest contributor over four years was General Electric; the second biggest was Goldman Sachs.
The lobbyists and PACs with Washington, D.C. addresses gave more money four years ago to Obama and McCain than 32 states combined. Occupy Wall Street has it right: there's something rotten on Wall Street; there's something rotten on K Street.
It's the Democrats and the Republicans. They all take the money from the few and pretend that they represent the many.”
On the next few weeks in the campaign:
"We're about to qualify for matching funds, the only candidate to do that. These are monies under $100. We'll double our campaign chest when we do that. We've raised a quarter of a million dollars from all 50 states. We're running a very special campaign. We don't have huge staff, but we're knowledgeable, we're on the ground in New Hampshire.
Our focus is not Florida, South Carolina, Iowa--it's a state with independent-minded people, it's a state of small business men and women, and it's a state that picks a winner in the Republican nomination. In addition to focusing on New Hampshire, we are focusing on our online, real-time campaign, from Facebook to email to Twitter. We are at the top of the campaign list at doing that. From the beginning, we focused on New Hampshire and on the Internet media."