Posted on 20th Nov 2012 @ 12:48 PM

The “day-after” headlines tell the story.

• “Bank stocks plunge after Obama’s re-election; Dodd-Frank and low interest rates settle in.” The Associated Press opened its post-election coverage with a little understatement. “Financial stocks are less than enthusiastic about an Obama second term. U.S. stocks plunged across the board on Wednesday, the day after President Barack Obama was decisively re-elected. But no segment of the market was hit harder than the financial industry.”

• “Wall Street Caught Between Barack and a Hard Place.” The Wall Street Journal’s David Reilly kicked off his article by noting that stocks were “taking an electoral pummeling.” Reilly added: “President Barack Obama’s re-election dashed investor hopes of an overhaul or repeal of the Dodd-Frank Act, or of a general loosening of bank regulation. Meanwhile, the election of Elizabeth Warren to the U.S. Senate has raised fears of renewed debate about breaking up big banks.”

• “Look Out Banks! Voters Elevated Reformers Warren, Baldwin.” Avi Salzman’s article in Barron’s begins with the observation “Banks are falling hard in the market plunge today…” Warren, the architect of the Consumer Financial Protection Bureau, needs no introduction to the nation’s bankers. The article includes the following snippet from her speech at the Democratic convention: “Wall Street CEOs — the same ones who wrecked our economy and destroyed millions of jobs — still strut around Congress, no shame, demanding favors, and acting like we should thank them.”

• “Elizabeth Warren’s Big Win Is A Crushing Defeat For Big Banks.” And let’s not leave out Forbes’ article by Halah Touryalai, which includes the following opening: “One of Wall Street’s worst nightmares came true last night. No, not Barack Obama’s victory over Mitt Romney but Elizabeth Warren’s Senate victory in Massachusetts.

There can be no doubt that the big regulatory winner in President Obama’s re-election is the Consumer Financial Protection Act. After all, candidate Mitt Romney had first talked about repealing the Dodd-Frank Act, which created the CFPB. Although he later changed his tune and said he would only tweak the legislation as necessary, either way, a Romney win would have jeopardized the CFPB’s authority as DC’s new financial “cop on the beat.”

And then there’s Elizabeth Warren’s triumphal return to Washington as Senator Warren. If Warren takes a seat on the Senate Banking Committee, a distinct possibility, she’ll be perfectly situated to watch over the agency she designed and helped to launch.

A Few Post-Election Thoughts from Financial Trade Associations

After congratulating “President Obama and all our nation’s elected representatives on their successful campaigns,” Consumer Bankers Association president and CEO Richard Hunt said the CBA stands ready “to work with our nation’s leaders to ensure an effective and efficient retail banking system that does not penalize consumers or small businesses.” Hunt was quick to add, however, that “Over-regulation is just as harmful as no regulation.”

“First and foremost,” Hunt said, “America’s small businesses and their customers need certainty. As our country’s small business owners plan for 2013, it is imperative our lawmakers immediately address the looming fiscal crisis.”

A statement issued by the Mortgage Bankers Association also stressed the need to proceed cautiously, encouraging the President and Congress “to work in a bi-partisan, cooperative manner so continued progress can be made on the critical issues our nation continues to face.”

The MBA continued, “We are at a very delicate time in a fragile housing recovery, and government and regulatory policies around housing need to be carefully thought out, in a comprehensive manner, ever-mindful of the way new programs, rules and regulations intersect with each other.

“That is why we are renewing our call on the President to appoint a federal housing policy coordinator to act as a ‘traffic cop’, not to make rules and policies, but rather to ensure a coordinated housing policy where federal and regulatory agencies are effectively talking to each other as the rulemakings and policies are proposed and adopted in order to ensure that they complement each other.

“We applaud this administration for the work that has been done to help borrowers in need and to establish rules to protect consumers from abusive lending practices. It is now critical that we build upon that progress in a balanced way that will protect current and future borrowers, while still giving qualified consumers access to the credit they need. Investment in, and financing of, real estate remains a crucial building block for this nation’s economy.”

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