Since the 2010 elections, Wisconsin has become the focus of the political world. The gubernatorial recall elections are fast approaching, leaving little attention for Wisconsin's other political races. While the gubernatorial election is important to all Wisconsinites, the open US Senate seat in Wisconsin could determine what political party holds a majority in the US Senate next year.
Recently Eric Hovde, a businessman from Madison joined Tommy Thompson and Mark Neuman in the race for the Republican nomination. Hovde’s background is in the financial industry, and we at Milwaukee Story had a chance to ask him a few questions on how this background would help him in influencing the national debate on the financial sector and how it relates to the US economy.
Joseph Simpson (Milwaukee Story): You have the unique experience of working in the financial industry, how would that experience guide you if you were elected to the US Senate? Specifically, what influence would it have on how you approach the relationship between Wall St. and Washington?
US Senate candidate Eric Hovde: My experience in the financial industry has provided me with a deep and fundamental understanding of the complex economic problems we face. There are very few politicians in Washington who understand our economy, the global capital markets, the credit markets or what has transpired with the derivative markets.
Because I've spent more than 20 years in the private sector building businesses and creating jobs, I know what it takes to balance a budget and make payroll, and I understand the tough decisions that are necessary to get our country back on track.
I believe that we must act immediately to end the toxic relationship that exists between Washington and Wall Street. Wall Street has bought off Washington in every regard, and they refer to the career politicians in our nation's capital as cheap insurance. Wall Street has been allowed to break our securities laws and defraud the American people in the name of greed for more than a decade now, and politicians from both parties are responsible. This is crony capitalism at its worst, and it needs to stop now.
Joseph Simpson: Since the financial fiasco of 2008, many voters have a healthy skepticism of the financial industry causing many to call for more regulations. Would you have supported any or the entire Dodd-Frank bill?
Eric Hovde: Dodd-Frank has been a failure because it actually created more support for the mega-banks and institutionalized the idea of "too big to fail." The big banks have gained cheap and easy access to the credit and equity markets because investors know the government will never let them fail, and small and medium sized businesses that are the real job creators and engines of economic growth have been put at a competitive disadvantage because of Dodd-Frank. Simple, free market solutions would have served a much better purpose.
Joseph Simpson: On Mark Belling's show, you talked about "boom and bust" cycles and currency debasement. The Federal Reserve is often associated with both of those phrases. Do you think the Federal Reserve needs to be reformed, and would you have supported Bernanke as Federal Reserve chairman?
Eric Hovde: The Federal Reserve is an entity that answers to no one, and it desperately needs to be reformed. Monetary policy should not be influenced by political whims, but some accountability is needed. I strongly believe that we need to audit the Federal Reserve on a regular basis, and I believe that their actions need to be accessible through the Freedom of Information Act.
Joseph Simpson: In a capitalist economy, financial markets are critical in facilitating the movement of capital. Wall Street plays a critical role in this process, but lately it appears the relationship between Washington and Wall Street is actually a detriment to "Main Street." What can be done to reform our financial system to a sounder component of our economy?
Eric Hovde: Wall Street provides the fuel for our economy through the debt and equity markets. I believe that the investment banking community should largely function as service providers, much like they were during the Glass-Steagall era. Allowing investment banks to trade aggressively with their own proprietary capital created a conflict of interest with their clients and the broader investment community. As such, we need to return to splitting the service provider function from the capital allocation function.
About the Author: Joseph works in the banking industry in Milwaukee. He is interested in political philosophy.