Four years after it took effect, Dodd-Frank's pernicious effects have shown that the law's critics were, if anything, too kind. Dodd-Frank has already overwhelmed the regulatory system, stifled the financial industry and impaired economic growth.
Resident Scholar Paul Kupiec, Resident Fellow Alex Pollock, and Arthur F. Burns Fellow in Financial Policy Studies Peter Wallison speak on a panel for an American Enterprise Institute conference call about the four year anniversary of the Dodd-Frank Act.
The notorious Dodd-Frank Act set up the Financial Stability Oversight Council (FSOC), a committee of regulators, and tasked it with identifying and preventing the ill-defined threat of systemic risk. Join our keynote speakers and expert panelists as they address the fundamental problems created by these political constructs.
Complaints about the FSOC arise because this agency has the extraordinary power to designate financial firms as systemically important financial institutions and there is very little evidence available anywhere that it has the ability or desire to use that power other than arbitrarily. Indeed, all the evidence is to the contrary.
The narrative that came out of the financial crisis was that it could have been prevented by better regulation. That misreading of the facts is why we are again on our way to a mortgage financing system that will one day bring on another financial crisis.
Basel I, II and III were developed by bank regulators, approved by an international agreement among bank regulators, and subsequently applied to the US banking industry. In this testimony, I discuss reasons why congressional abstention from this process was not a good idea.
At a special Capitol Hill lunch conference on Tuesday, May 6, experts gathered to discuss how the SIFI designation process consigns financial firms to bank-like regulation and could have a major adverse effect on competition, credit availability and economic growth in the United States.
The wrong diagnosis of a policy issue can lead to the wrong prescription. A good example is the persistent argument by the FSOC and the editorial pages of the Wall Street Journal that a stable $1 net asset value for money market mutual funds is somehow a threat to the taxpayers or the stability of the financial system.
By politicizing the allocation of mortgage credit beyond the level that was possible with Freddie and Fannie, the bill proposed by Sen. Tim Johnson and Sen. Mike Crapo manages to make the affordable-housing provisions of current policy worse.