Sunday, March 21, 2010

Chris Dodd’s Big, Misguided Bill

Dodd in the Senate and Frank in the House were largely responsible for the collapse of Fannie and Freddie and almost, the entire banking system. Now Dodd is Chairman in charge of the new financial control legislation. Perhaps the thinking is that a person learns from his mistakes and, boy has Dodd made mistakes. The only sure thing is that another (or two) costly government bureaucracies will be born.

The Dodd bill does propose a big new government department inside the Fed to protect the consumer from banks and bad financial products. But the Federal Reserve System is already overburdened with regulatory duties, and it’s a mistake for Congress to assign it yet another complicated role.

Rather than creating a new oversight department that expands Washington’s regulatory power, it would be better to use this opportunity — per the Obama administration’s notion of not letting a crisis go to waste — to streamline and concentrate the many existing consumer financial regulators in one place. This would result in a reduction of government jobs, rather than the big increase that is going on now.

By focusing on the wrong problems, the Dodd bill would make the economy worse, meaning the private sector will not be able to create the jobs the U.S. economy needs. At the same time, state and local governments won’t collect the level of tax receipts needed to pay pensions and operating expenses.

Economic and job growth require good financial regulation, proposals for which are few and far between in Washington today.
Read National Review article here.

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