Next Republican generation poses risk for banks

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-- The author is a Reuters Breakingviews columnist. The opinions expressed are his own
http://www.reuters.com/article/idUSN0819657020100208

Sarah Palin's "Tea Party" speech in Tennessee at the weekend should worry Wall Street. Her words were as much anti-Big Money as anti-Big Government. And they reflected a Republican wave that goes beyond the party's fringes. Banks hoping an influx of GOP lawmakers will dilute reform may need to think again.

The industry can be forgiven for thinking congressional gridlock after November's midterm elections might be good. Bank executives, many big donors to the Democrats, are a bit shocked that the Obama administration's approach to bailed-out banks has grown teeth in 2010. The White House is pushing a bank tax, as well as limits on size and trading activities.

Traditionally, more Republicans in Congress would be good for Wall Street. The GOP has, for instance, worked tirelessly to neuter a proposed new consumer finance regulator. It's no wonder that some Republican leaders have been begging banks for more campaign cash.

But Palin possesses uncanny political radar. Speaking to the small-government, fiscally-responsible Tea Partiers, she didn't blame the Federal Reserve or U.S. housing policy for the financial crisis. She blamed the bankers. Then she attacked their big bonuses. The $700 billion bank bailout? To Palin, that was nothing but crony capitalism. The crowd went wild.