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Snappy answers to badly moderated questions. Part 5 in an ongoing smackdown.

In this edition:
"What is your view about the level of federal regulation of the economy right now? Is there too much? Should there be more?"

ROMNEY: Regulation is essential. You can't have a free market work if you don't have regulation. As a businessperson, I had to have -- I need to know the regulations. I needed them there. You couldn't have people opening up banks in their -- in their garage and making loans. I mean, you have to have regulations so that you can have an economy work. Every free economy has good regulation. At the same time, regulation can become excessive.

LEHRER: Is it excessive now, do you think?
ROMNEY: In some places, yes. Other places, no.
LEHRER: Like where?
(CROSSTALK)

ROMNEY: No, it can become out of date. And what's happened with some of the legislation that's been passed during the president's term, you've seen regulation become excessive, and it's hurt -- it's hurt the economy. Let me give you an example.

Dodd-Frank was passed. And it includes within it a number of provisions that I think has some unintended consequences that are harmful to the economy. One is it designates a number of banks as too big to fail, and they're effectively guaranteed by the federal government. This is the biggest kiss that's been given to -- to New York banks I've ever seen. This is an enormous boon for them. There've been 122 community and small banks have closed since Dodd- Frank.

So there's one example. Here's another. In Dodd-Frank...

LEHRER: Do you want to repeal Dodd-Frank?
ROMNEY: Well, I would repeal and replace it. We're not going to get rid of all regulation. You have to have regulation. And there are some parts of Dodd-Frank that make all the sense in the world. You need transparency, you need to have leverage limits for...
LEHRER: Well, here's a specific...
(CROSSTALK)

ROMNEY: But let's -- let's mention -- let me mention the other one. Let's talk...

(CROSSTALK)

LEHRER: No, let's not. Let's let him respond -- let's let him respond to this specific on Dodd-Frank and what the governor just said.

OBAMA: So the real question is: Does anybody out there think that the big problem we had is that there was too much oversight and regulation of Wall Street? Because if you do, then Governor Romney is your candidate. But that's not what I believe. Dodd-Frank is a necessary step toward keeping our economy safe from corporate raiders and fraudulent bankers. But nobody is for regulation just to have paperwork. I think in the example of the financial industry, they showed in the last 10 years that they cannot or are unwilling to police themselves. It was a niave idea, it's been proven to not work, and now my opponent is trying to sell it to you again.

Banks are declared too big to fail because their previous failure nearly collapsed the US Economy. Nearly brought down the Global economy. Returning to those days isn't a plan unless your plan is to collapse it all again. I'm not in the business of trying the same failed policies again and hoping everyone is more honest this time. We need strong regulations on banking and wall street, while understanding that these industries aren't evil, they were just unregulated. The bailout was a good bi-partisan idea and has been paid back. Let me repeat that: Those largest banks have paid back their bailouts with interest. The economy is growing again.

We can't just let the same drivers who crashed the car take the wheel of the tow-truck.

ROMNEY: Sorry, but that's just not -- that's just not the facts. Look, we have to have regulation on Wall Street. That's why I'd have regulation. But I wouldn't designate five banks as too big to fail and give them a blank check. That's one of the unintended consequences of Dodd-Frank. It wasn't thought through properly. We need to get rid of that provision because it's killing regional and small banks. They're getting hurt.

Let me mention another regulation in Dodd-Frank. You say we were giving mortgages to people who weren't qualified. That's exactly right. It's one of the reasons for the great financial calamity we had. And so Dodd-Frank correctly says we need to have qualified mortgages, and if you give a mortgage that's not qualified, there are big penalties, except they didn't ever go on and define what a qualified mortgage was.

It's been two years. We don't know what a qualified mortgage is yet. So banks are reluctant to make loans, mortgages. Try and get a mortgage these days. It's hurt the housing market because Dodd-Frank didn't anticipate putting in place the kinds of regulations you have to have. It's not that Dodd-Frank always was wrong with too much regulation. Sometimes they didn't come out with a clear regulation.

I will make sure we don't hurt the functioning of our -- of our marketplace and our business, because I want to bring back housing and get good jobs.

12:19 PM PT: PART 6: OBAMACARE
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