Politics of Wall Street - Bailout Backlash in Ohio

Wall Street reform features prominently in the race to represent Ohio in the U.S. Senate, with both candidates trying to score points on the bailout backlash front.
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WASHINGTON (

TheStreet

) -- Anti-Wall Street rhetoric features prominently in the race to represent Ohio in the U.S. Senate, with the Republican and Democrat candidates both trying to score points on the bailout backlash front.

There's trumped up, populist propaganda aplenty on both sides. Democrat Lee Fisher blasts the "reckless abandon" of Wall Street while Republican Rob Portman spouts off about "greed and lack of accountability" of the bankers.

Looking past all this noise, there are actually some pretty clear differences in what these two politicians are proposing to do to Wall Street. Fisher talks tough about breaking up the big banks and blocking bonuses, while Portman expresses concern about preserving bank competiveness even as he hammers on the need for tighter regulation and greater transparency.

Fisher wants to reinstate the law separating investment trading and commercial deposit banking. This would hit banks like

JPMorgan Chase

(JPM) - Get Report

and

Bank of America

(BAC) - Get Report

, which became even more deeply engaged in investment banking when they took over some of their struggling peers in the heat of the financial meltdown. JPMorgan bought Bear Stearns and Bank of America bought Merrill Lynch.

Portman supports greater banking scrutiny, but he also warns that "Congress should not impose overly burdensome regulations that will forfeit banking business to overseas competitors." Portman favors "reasonable risk/capital rules" for investment and commercial banking and more rules to govern the kinds of derivatives impugned during the mortgage meltdown.

There are two companies, however, that Portman wants to cut down in size:

Fannie Mae

(FNMA)

and

Freddie Mac

(FMCC)

. He supports measures to reduce their size "to ensure they do not contribute to a future financial crisis."

Portman also has strong feelings about regulating ratings agencies like

Moody's

(MCO) - Get Report

,

McGraw-Hill's

(MHP)

Standard & Poor's

and

Fitch

. He wants to prohibit companies from picking their ratings agency and wants tougher regulations for the agencies themselves to make clear that a "favorable rating is not for sale."

Fisher is more consumer focused with his other proposals for Wall Street reform. He wants the Treasury to block all bonuses for executives at companies that haven't repaid federal bailout funds and he wants a consumer financial protection agency that would address "outrageous overdraft fees", "soaring credit card interest rates" and " predatory mortgages."

That could put pressure on banks like

Citigroup

(C) - Get Report

, one of the nation's biggest credit card issuers. Citi already split off its investment banking business, Smith Barney, into a joint venture with

Morgan Stanley

(MS) - Get Report

.

Fisher also wants to empower bankruptcy judges to modify mortgage terms. That could cause pain for Bank of America, which became the nation's biggest home lender after buying Countrywide, and

Wells Fargo

(WFC) - Get Report

, which is among the biggest banks involved in home mortgage servicing.

Those are some of the implications for the publicly traded companies in the cross-hairs of all this politicking. Check back each Friday for more

"Politics of Wall Street"

columns that explore election issues from an investor's perspective.

For more details on the candidates, you can visit their political Web sites here (in alphabetical order by last name):

>

Lee Fisher

>

Rob Portman

--Written by Glenn Hall in New York.

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