Where to begin? How about the very first sentence of the New York Times article hailing passage of the Dodd-Frank financial bill? According to the illustrious fishwrap, “sweeping expansion of federal financial regulation” reflects “a renewed mistrust of financial markets after decades in which Washington stood back from Wall Street with wide-eyed admiration.”
We’ve seen some liberalization of financial dealings over the years. It was once illegal to own gold. Travelers can be glad of the rise of interstate banking after governments began to permit it in the 1980s.
But have politicians really offered nothing but “wide-eyed admiration” for “Wall Street” for “decades”? Has the federal government really been hands-off till now?
Take Senators Dodd and Frank. They were out front pushing home ownership on people who could not afford homes, with multiple programs and legislative packages. This bubble-making process was further inflated (quite literally) by the Federal Reserve’s cheap credit policies. Many lenders, encouraged by government-provided (but perverse) incentives, jumped onto the Irresponsibility Bandwagon in the run-up to collapse.
So how can the “solution” be additional bailout authority . . . which will further encourage bankers and others to invest unwisely?
And the new regulations — these, too, are supposed to help? We don’t even know what they are yet, because bureaucrats have yet to write them, as specified (vaguely) by Congress. In addition to their burden, they will allow pols to shake down Wall Street for years to come.
This is Common Sense. I’m Paul Jacob.