What Paul Ryan Wants Wall Street to Forget

Wall Street is welcoming the arrival of Paul Ryan on the Republican ticket — a pro-business and fiscally (but not only fiscally) conservative vice presidential candidate. He likes the stock exchange. The Wisconsin representative is a stockholder in Apple, Exxon Mobil, GE, Procter & Gamble, IBM, Google, McDonalds and Berkshire Hathaway — the stocks of the Oracle of Omaha, Warren Buffett. It was nothing but Blue Chip. Among the largest contributors to his campaign are UBS, Bank of America, Wells Fargo and Goldman Sachs. And yet, Wall Street runs the risk of having a few surprises in the coming weeks; little by little, journalists will become interested in his votes and positions in the House of Representatives. Wall Street could be in for a rude awakening.

In 1999, Ryan voted to repeal the Glass-Steagall Act, established in 1933 shortly after the stock market crash. By voting to abolish this law, Paul Ryan allowed commercial and investment banks to merge. Today, however, he campaigns for control over the size of banks in order to avoid those that are notoriously “too big to fail.” The reason for his change of heart was that a financial giant can’t go bankrupt without running the risk of dragging down the rest of the economy. This risk would require the intervention of the government. It would have been better to think of that before. The man who is a self-proclaimed lover of spreadsheets and numbers would do better to reflect a little before voting. He votes with the mob when it suits his financial affairs and when he wants to be looked upon favorably in the eyes of the tea party (a decade later when the trend is more to populism). In the meantime, we have been party to an economic meltdown.

Paul Ryan is the opponent of another law called the Dodd-Frank Act, which was put into place after the crash of 2008. He is particularly opposed to one of its provisions, a favorite of Henry Paulson, ex-chairman of Goldman Sachs and Secretary of the U.S. Treasury under G.W. Bush. This part of the law allows the government to intervene and dismantle a bank so that its collapse does not drag down the rest of the country’s economy. Paulson said that he would have liked to have such a law when Lehman Brothers threatened to collapse. Ryan is opposed to this mechanism called “resolution authority,” under the pretext that it would lead to, once again, the intervention of the state. What’s really interesting is that the same Paul Ryan voted for government intervention on a massive scale by voting (and encouraging others to vote) for the bailout called the Troubled Asset Relief Program. This law, proposed by Bush, gave the government $700 million to support banks and financial institutions by buying some of their toxic assets.

Finally, Paul Ryan found himself, once again, opposed to Wall Street on the issue of government debt. He said that he was willing to let the United States fail to meet its obligations to force the White House to accept additional budget cuts — a position contrary to that of Wall Street. Indeed, the question of debt has made markets too nervous and unpredictable, and unpredictability is a quality that is not particularly appreciated by the financial community. American citizens will soon realize that Paul Ryan is not only an extremist, but also, according to the American expression, a “loose cannon,” which does considerable damage.