At an event on Tuesday, panelists joined AEI's Peter Wallison and Alex Pollock to discuss Wallison's new book "Bad History, Worse Policy: How a False Narrative about the Financial Crisis Led to the Dodd-Frank Act" (AEI Press, January 2013). Wallison argued that competition in the marketplace of ideas broke down after the 2008 financial crisis, resulting in a singular narrative for reform dominated by the left. As a result, the Dodd-Frank Act inappropriately increased government oversight and regulation while ignoring the fundamental cause of the crisis: excessive government involvement in the housing sector.
Panelists praised Wallison's narrative, agreeing that by ignoring the warnings outlined in the book, regulators were doomed to repeat the failures of the past. Hester Peirce of the Mercatus Center suggested that Dodd-Frank perpetuated the problems of the last recession by codifying systematically important financial institutions. Wayne Abernanthy of the American Bankers Association noted that the sheer magnitude and complexity of implementing Dodd-Frank prevented regulators from identifying the impending financial bubble. John Allison of the Cato Institute concluded that the existing narrative of the financial crisis ignores the important role the Federal Reserve played in pumping up the housing bubble.
Since the passage of the Dodd-Frank Act in 2010, US economic growth has slowed. When the Volcker Rule is finalized, state and local governments will experience increased borrowing costs. The largest financial institutions will dominate the market, with funding advantages over their smaller rivals. The adverse effects of Dodd-Frank will seriously outweigh its benefits. Why did a law with these deficiencies pass in Congress?
Peter Wallison’s new book “Bad History, Worse Policy: How a False Narrative about the Financial Crisis Led to the Dodd-Frank Act,” (AEI Press, January 2013) provides the answer: the act was based on a false narrative about the causes of the financial crisis. This book release event will examine how a mistaken view of an event leads to bad policy decisions.
Copies of Wallison’s new book will be available at the event.
If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.