Recently, Barack Obama has refrained from mentioning Dodd-Frank as one of his big accomplishments as President.  That’s fortunate, because had Obama used that as a campaign claim this month, the huge loss taken by JP Morgan and one-time Obama ally Jamie Dimon would have done serious damage.  As it is, Politico wonders whether Obama might have a big problem convincing voters that he’s done anything significant to address the underlying issues that created the 2008 financial-system collapse:

The giant $2 billion trading loss at JPMorgan Chase highlights a central problem in President Barack Obama’s case for a second term: Four years after the financial crisis nearly brought the nation to its knees, very little appears to have changed.

No high-profile bank executives are in jail. Special multi-agency task forces to go after financial fraud and mortgage market abuses appeared in State of the Union addresses, only to issue a few news releases and mostly vanish from public view.

And now one of the largest banks in the United States, headed by a Democrat and operating with government guarantees, has turned in the kind of headline-grabbing, casino-style style loss that drives voters crazy and that Obama’s financial reform bill was supposed to stop.

More than two years ago, before the passage of Dodd-Frank, Dimon had already begun to distance himself from Obama, thanks to Obama’s hostility toward Wall Street.  Obama and Democrats rushed to woo Dimon and others back into the fold to get some fundraising for the midterm elections.  The disaffection probably will insulate Obama from his connections to Dimon.  Dimon hasn’t contributed much this year, which will also help, but it calls into question the usefulness of the very expensive Dodd-Frank reforms.

The problem with Dodd-Frank is that it didn’t address the core problem of the collapse and the perceived need for federal intervention — Too Big To Fail status. Instead, the bill imposed onerous burdens on all banks and financial institutions while ignoring the growing consolidation in the industry that triggered the bailout.  It nibbled at the edges, with more disclosure requirements and credit burdens while leaving JP Morgan and other giants alone.  Even the more onerous burdens of Dodd-Frank impacted the largest firms least, since the economy of scale allowed them to address those at lower costs than their competitors.

If JP Morgan doesn’t go under as a result of their loss — and it doesn’t appear they will — the headlines now probably won’t swing too many votes in November.  If Obama and Tim Geithner have to intervene to rescue JP Morgan and Dimon, it will be a political disaster, and Obama will be lucky to break 40% in November.  But if we want to seriously guard against Too Big To Fail and eliminate the need to bail out banks in financial crises, we need to go a completely different direction than Dodd-Frank, which all but guarantees a repeat of it.