Photograph by Nicholas Roberts/AFP via Getty Images

This September 15, 2008 file photo shows the sign for Lehman Brothers headquarters in New York.

Many critics of the Dodd-Frank financial regulatory overhaul will say that the bill’s biggest shortcoming is its failure to reduce the size of the largest banks — the ones that are “Too Big To Fail.”

Federal Reserve Governor Daniel Tarullo, who is running the Fed’s efforts to implement those regulations, says the biggest gap lies elsewhere: In the short-term wholesale funding markets where banks borrow overnight.

“We would do the American public a fundamental disservice were we to declare victory without tackling the structural weaknesses of short-term wholesale funding markets,” Tarullo said today in Washington at the Peterson Institute for International Economics.

After all, the financial system still remains vulnerable to the risk that short-term funding could be withdrawn and financial institutions would face the type of liquidity crisis that led to the collapse of Bear Stearns Group Cos. and Lehman Brothers Holdings Inc. in 2008.

Tarullo outlined how, using authority granted to the Fed under Dodd-Frank, the central bank could crack down further on the largest financial institutions, requiring them to hold more capital and liquidity to buffer against risks in short-term markets.

His speech comes as top U.S. bank regulators and lawmakers are pushing for further action to limit the risk that the government again winds up bailing out one or more of the nation’s biggest financial institutions.

Sen. Sherrod Brown, an Ohio Democrat, and Republican Sen. David Vitter of Louisiana unveiled legislation last month that would mandate a 15 percent capital cushion for banks with more than $500 billion in assets. An analysis of that proposal by Standard & Poor’s said the largest banks may split themselves up rather than face such a requirement.

Tarullo’s proposal is more incremental, focused on dialing up the existing approach. And he made clear that, if regulators are to go further, it will have to be Congress that makes the call.

“Proposals to impose across-the-board size caps or structural limitations on banks–whatever their merits and demerits–embody basic policy decisions that are properly the province of Congress,” he said.

Original post is Dodd-Frank’s Missing Link by Political Capital.

Photograph by T.J. Kirkpatrick/Getty Images

Sen. Sherrod Brown, center, takes his seat beside Sen. Jon Tester and Sen Robert Menendez, right, before the confirmation hearing of Richard Cordray, nominee for director of the Consumer Financial Protection Bureau, and Mary Jo White, nominee for chair of the U.S. Securities and Exchange Commission, in the Senate Committee on Banking, Housing and Urban Affairs on March 12, 2013 in Washington, DC.

Lawmakers and lobbyists in Washington are busy chewing over the possibility that one of the main advocates of breaking up the big banks could be in the running to take over the Senate Banking Committee in 2015.

The current chairman of that panel, South Dakota Democrat Tim Johnson, will announce tomorrow his plans for next year’s election. A Senate Democrat aide says Johnson is expected to say that he will retire. If the Democrats retain control of the Senate in the 2014 vote, Sherrod Brown, an Ohio Democrat who thinks banks are too large, would be a potential candidate.

Brown isn’t the next Democrat in line by seniority. That would be Jack Reed of Rhode Island. Reed, though, is poised to lead the Armed Services Committee, since its chairman, Carl Levin of Michigan, is also retiring.

Charles Schumer of New York would be next down the list. If he didn’t make a bid for the post, Robert Mendendez of New Jersey follows in seniority. Still, Menendez is already chairman of the Foreign Relations Committee and is the subject of ethics investigations.

Elizabeth Warren, in her first term representing Massachusetts, has already made a mark on the committee as an outspoken critic of the big banks. As a freshman, she wouldn’t have the seniority to lead the panel.

That could leave Brown, who is set to introduce a bill in April that would impose higher capital standards on the largest banks and grant regulatory relief for community banks.

Jaret Seiberg, a senior policy analyst at Washington Research Group, a unit of Guggenheim Securities LLC, said that moves in Congress to curb bank size would be stronger under a Brown committee chairmanship.

“This is setting the stage for the real fight that is going to be after the midterm elections when Senator Brown is a leading candidate to be Banking chairman,” Seiberg said today. “The odds are against them getting to the finish line in this Congress, but it’s a much more real threat in the next.”

Of course, if the Republicans take control of the Senate in 2014 the speculation on the Democratic side is moot. The ranking Republican on the committee, Mike Crapo of Idaho, would be in line to take over.

Perry Plumart, a spokesman for Johnson, said the 66-year-old senator will announce his plans for the 2014 election in a news conference tomorrow. Johnson joined the Senate in 1997.

Original post is Could ‘Break Up the Banks’ Senator Take Johnson’s Spot? by Political Capital.

Michael Wager, 61, will seek election in Ohio’s 14th District, according to papers filed this week with the Federal Election Commission.

“Although it does seem early, the two-year cycle seems to go by quite quickly, and the earlier I get in and raise the requisite funds and organize the requisite support, the more likely I’ll be in a position to win a primary, if any, and to prevail in a general election,” Wager told Political Capital today.

Wager presumably will be challenging Republican Dave Joyce, who was elected Nov. 6 to succeed retiring Republican Steve LaTourette. Joyce beat Democrat Dale Blanchard, 54 percent to 39 percent.

Wager served as finance chairman for Brown, who defeated Republican state Treasurer Josh Mandel. Wager worked on Capitol Hill in the 1970s for Representatives Charles Vanik and Mary Rose Oakar of Ohio and Senator Lawton Chiles of Florida.

Original post is Sherrod Brown Financial Backer Plans Own Race in 2014 by Political Capital.

Photograph by Tony Dejak/AP Photo

Democratic Sen. Sherrod Brown waves to supporters after speaking at a campaign event for President Barack Obama at Nationwide Arena on Nov. 5, 2012, in Columbus, Ohio.

There’s been a lot of talk about wrong polls this year, because there have been a lot of them.

One that’s come out right again is The Ohio Poll.

The University of Cincinnati’s Ohio Poll projected President Barack Obama’s re-election margin in Ohio within 0.2 percent of his actual vote statewide, co-director Eric Rademacher notes.

The survey also got Sen. Sherrod Brown’s re-election victory within 0.2 of his actual vote.

“The Ohio Poll has now accurately projected the winner in 40 out of 40 statewide races (candidates and ballot issues) polled since 1994,” Rademacher adds.

And the voters of Ohio have called every presidential election since 1964.

This was No. 13 in the Buckeye State’s bellwether streak.

They get things right in Ohio, it appears.

Original post is Ohio Poll, like Ohio, Getting it Right by Political Capital.

Courtesy Michael Bonfigli/Christian Science Monitor

Senator Charles Schumer, vice chair of the Democratic Conference and chair of the Senate Democratic Policy and Communications Center, speaks at the Monitor Breakfast, on Nov. 8, 2012.

Democrats are having some fun at the expense of Karl Rove this week.

First it was Ohio’s Sen. Sherrod Brown, re-elected this week, taking stock of how little impact the super-PAC engineered by the former Republican White House political strategist  had on races around the country. By the numbers, it was a bad day for Rove.

Now it’s New York’s Sen. Charles Schumer.

Republican political mastermind Rove’s reputation took “a significant hit” with Republican presidential nominee Mitt Romney’s election loss,  Schumer told reporters today at a Christian Science Monitor breakfast.

Schumer, the chamber’s third-ranking Democrat, predicted that Crossroads GPS, the nonprofit group that Rove helped create, would be less influential in future elections.

“If Cossroads were a business, and Rove was the CEO, he’d be fired for getting a poor return for his investment,” he said.

Schumer said he saw Rove on television about 2 a.m. yesterday talking about how his efforts helped to decrease Obama’s margin of victory in swing states. The billionaire donors backing the super-PACs had something else in mind with their investments, he suggested.

“I’m sure he went to Sheldon Adelson and to Harold Simmons and said, `Put up these millions of dollars, and he’ll win, but we’ll decrease his margin,’” Schumer said. “I don’t think Crossroads is going to end up being as much of a player two years from now as it was right now, and I think his reputation has obviously taken a hit.”

Democrats yesterday also were delighting in watching a video of Rove on Fox News on election night in which Rove insisted that the news channel had prematurely called Ohio for President Barack Obama.

Original post is Whack-a-Karl Rove: The Piling-On by Political Capital.

Photograph by Tony Dejak/AP Photo

Democratic Sen. Sherrod Brown, left, is hugged by his daughter, Liz, as they celebrate at the Ohio Democratic party election night celebration on Nov. 6, 2012, in Columbus, Ohio.

It was a bad night for Karl Rove.

That’s the assessment this morning of  Sen.  Sherrod Brown of Ohio after yesterday’s election results.

First, Brown survived what he said was $40 million spent against him in his race with Republican challenger Josh Mandel by outside groups, including Crossroads GPS, the nonprofit group founded with help from Rove.

Then, Rove, a Fox News contributor and the Republican strategist who helped former President George W. Bush carry Ohio and win re-election in 2004, questioned the network’s decision to call Ohio for President Barack Obama as “premature.” Obama won the unofficial Ohio vote by 2 percentage points statewide.

“Not to egg him on for six years later, but Karl Rove doesn’t know Ohio as well as he thinks he does,” Brown said today at a post-election press conference in Columbus.

“I don’t say he’s not welcome here,” Brown continued. “He’s always welcome here. We look forward to him coming to somewhere in Ohio and making a speech and doing what he does here and helping the local economy, I’m fine of that. But I think his brand of politics is pretty discredited.”

Both Crossroads and the U.S. Chamber struck out in a lot of races, as Jonathan Salant has noted.

Original post is Rove’s Bad Night: Sherrod Brown by Political Capital.

Photograph by Chris Maddaloni/CQ Roll Call/Getty Images

Rep. Nan Hayworth, left, and Rep. James Renacci before a House Financial Services Committee committee hearing.

The Cleveland media market is so saturated with political TV commercials – and voters are so sick of them — that it’s a waste of money to run a barrage of spots as the Nov. 6 election nears.

So says Republican Rep. James Renacci, who in a redrawn district is squaring off against another House member, Democrat Betty Sutton. Renacci decided in August not to use TV time he had previously reserved for the campaign’s final two weeks. Instead, he ran more ads during the summer month and, rather than again rely on a media presence, now is spending money on direct voter contacts, says spokesman James Slepian.

“If you just throw all your money at broadcast TV and hope it lands in the right place and you wait until the end to do it, good luck,” Slepian said. “Voters, a lot of them, have tuned this stuff out already. They’re fast-forwarding the ads, they’re not watching them, they’re muting them, they’re so sick of it.”

Cleveland is Ohio’s top market for ads paid for directly by President Barack Obama and Republican challenger Mitt Romney, with about 12,000 aired between Sept. 24 and Oct. 24, according to data compiled by New York-based Kantar Media’s CMAG. That doesn’t count all the political spots financed by outside groups, or those in the hot Senate race between incumbent Democrat Sherrod Brown and Republican Josh Mandel.

Sutton’s campaign is calling Renacci’s move as a “colossal strategic blunder.”

“The fact is, the more that voters see Jim Renacci, the less they like him,” Sutton spokesman Steve Fought said. “That’s the only reason for pulling his TV commercials.”

Slepian said Renacci will have a media presence in the campaign’s final days, on cable stations and with targeted broadcast TV placements.

The nonpartisan Cook Political Report rates as a tossup the faceoff between Renacci, a freshman, and Sutton, who has served three terms.

Original post is Ohio Voters Tune Out TV Ads — `Sick of It,’ Campaign Aide Says by Political Capital.

Photograph by Charly Kurz/laif/Redux

Sanford "Sandy" Weill

Sanford Weill is blowing Washington minds.

The former Citigroup CEO who helped engineer the country’s current financial system in the late ’90s says he now thinks investment banks and commercial banks should be split up.

His change of heart voiced on CNBC this week surprised pundits, banking leaders and lawmakers alike.

Frank Keating, president and CEO of the Washington-based American Bankers Association, said he was “dismayed” by Weill’s suggestion.

“It’s time to push the pause button on flawed proposals that would damage the U.S. economy,” Keating said in a statement today.

Karen Shaw Petrou, managing partner and co-founder of Federal Financial Analytics, argued that Weill’s suggestion couldn’t hold water. But first, she called out his about-face.

“Is Sandy Weill Wall Street’s Alfred Nobel, who took his then-untold millions earned by arms trafficking and created an eponymous peace prize?” she wrote in a memo to clients today. “Or is he more like a madam who, recanting profitable sins, heads to a comfortable convent populated by society’s nicest ladies?”

Former Senator Chris Dodd and Representative Barney Frank, after whom the 2010 financial overhaul was named, both criticized Weill’s comments on CNBC. His suggestion is poorly timed and unnecessary given the Dodd-Frank Act’s restrictions on proprietary trading known as the Volcker rule, Frank said yesterday.

Weill’s endorsement of bank breakups was hailed as “good news”  by Senator Sherrod Brown. The Ohio Democrat is having trouble getting traction for a bill he introduced in May that would limit the size of banks.

“People who understand what’s happening with banks realize that these banks are too big to fail, too big to manage and too big to regulate,” Brown said in an interview yesterday.

Senator Robert Corker, Brown’s colleague on the Senate Banking Committee, said overseers’ ability to regulate banks has always been questionable, but Weill’s star power gives his remarks some kick.

“It’s just not possible to regulate in such a way that risk that’s concentrated in this way is mitigated,” the Tennessee Republican said in an interview yesterday. “I think people are looking at a lot of things, stronger capital. But I do think coming from someone like this makes it interesting and probably causes people to focus more on what he’s saying.”

Lawmakers hope to reach a decision on the Volcker rule by the end of the year, so Weill might have to wait a while for another banking overhaul.

Original post is Banking’s Sandy Weill: Latter-Day Nobel Playing with Dynamite? by Political Capital.

Photograph by Brad Wilson/Getty Images

Steam and smoke from a coal-fired power plant.

A nonprofit organization that supports free markets and curbing regulation is airing television ads in Ohio attacking Democratic Senator Sherrod Brown on energy policy.

American Commitment, which formed in April, is spending about $1.2 million on two ads that began airing June 29, according to New York-based Kantar Media’s CMAG, which tracks advertising.

Both ads attack Brown’s June 20 vote against overturning a regulation to cut mercury and other toxic emissions from coal-fired power plants. Proponents of overturning the rule, who lost 46 to 53, said that it was too costly.

A spot that first aired in the Youngstown market says that Brown’s vote meant he would “raise our electricity costs.” A second spot that first aired in Columbus also criticizes Brown’s votes for the 2009 economic stimulus and the president’s 2010 health-care law.

“We just think it’s really important for people to understand what his record is and that he’s been voting in a way that’s economically destructive to his own state,” Phil Kerpen, the president of American Commitment, said in a telephone interview.

Brown’s campaign responded to the ads on his Web-site. He’s seeking a second term against Republican state Treasurer Josh Mandel in a politically competitive state that President Barack Obama and Republican challenger Mitt Romney are targeting.

Kerpen, a former vice president at Americans for Prosperity, said that American Commitment formed on April 12. Because it’s a 501c4, the group doesn’t have to reveal its donors, so it’s not known who’s helping to underwrite the ads.

“We protect the privacy of all of our contributors,” Kerpen said. “We take that very seriously.”

Original post is Energy Planning: Ohio’s Brown Targeted by Anonymous Donors by Political Capital.

Photograph by Brendan Smialowski/AFP/Getty Images

A member of Rick Santorum's staff outside the U.S. Supreme Court during opening arguments on President Barack Obama's signature health care reform law.

The unfettered money is everywhere.

With unprecedented money floating around in the super-PAC campaigns of 2012, it’s tempting to think of it all as an Obama-Romney contest.

It’s much more than that.

American Crossroads, the super-PAC that Republican strategist Karl Rove helped found, has taken plenty of aim at President Barack Obama. Yet the committee’s resources run deep enough to delve into many hotly contested state and congressional races as well.

The common thread of the ad campaign is Crossroads’ linkage of Democrats to Obama in general, and to “Obamacare” in particular. In the process, Crossroads also plays loose with some facts: The health care law that Obama won was scored by the nonpartisan Congressional Budget Office as lowering deficits by $210 billion over 10 years, while Crossroads’ ad targeting Senator Sherrod Brown of Ohio maintains that “Obamacare” adds $700 billion to the deficit.

Crossroads Grassroots Public Strategies, a nonprofit 501c4 arm of the committee, has spent more than $6.6 million this election cycle for ads running more than 15,000 times in 10 U.S. Senate races, according to data provided by New York-based Kantar Media Group’s CMAG, a company that monitors campaign advertising. The group also paid $1 million to run ads 3,040 times in nine House districts.

American Crossroads, the super-PAC, has paid $51,080 to run ads 119 times to influence a Senate race in New Mexico.

In the presidential race, Crossroads GPS has spent $25.2 million to run ads 38,245 times, and American Crossroads has spent $133,860 to run ads 401 times.

Brown voted for `Obamacare,” a Crossroads GPS ad says, also maintaining that he supports Obama’s agenda 95 percent of the time. The ad quotes Brown as saying: “This bill pays for itself, actually reduces the deficit.” The ad states: actually Obamacare adds $700 billion to the deficit. “In Sherrod Brown’s Washington, talk is cheap,” the narrow says in closing. “But in Ohio, it’s costing us a fortune.”

In Virginia, where former Republican Senator George Allen is seeking a rare comeback, Crossroads targets Tim Kaine, the former governor and chairman of the Democratic National Committee chairman running for Senate.

“When Tim Kaine went to Washington, he left Virginia behind,” the ad says — putting partisan ambitions first — “I’m on TV all the time,” it quotes Kaine in a clipped clip. Medicare spending cuts, new energy cuts. Why did he do it? “`The answer is to serve the president,” Kaine is quoted as saying in another clipped clip. Narrator: “What about Virginia?”

In another attack on “New York liberal Bob Kerrey,” the former Nebraska senator-turned New York college president who is running for Senate again back home, Crossroads hits him for voting against the balanced budget amendment — “It’s isn’t just because I live in Greenwich Village now — the longer I’ve been here the further to the left I get on health care,” Kerrey is quoted as saying in a talk-show interview. The ad portraying Kerrey as “liberal”  and “out of touch” finishes with a photo of him and Senator John Kerry, the Massachusetts Democrat who ran for president in 2004.

Bloomberg’s Greg Giroux contributed to this report.

Original post is Kerrey, Kaine, Brown at Crossroads by Political Capital.