How Dodd-Frank Ate The U.S. Economic Recovery

Investors Busniness Daily ^ | 07/28/2015 | IBD Editorial

[expat_panama]

Regulation: The Dodd-Frank Act's fifth anniversary this month has received surprisingly little notice. Too bad. It's a pernicious law, one that a devastating new report suggests is largely to blame for our lackluster economy.

How bad is Dodd-Frank? One of its main goals, cited by both the White House and the then-Democrat-run Senate, was to get rid of the "too big to fail" doctrine that made some banks too important to allow to go bust.

It sounded good at the time. But in fact, it's had the exact opposite effect, leading to a decline in small banks and rising market share for the very largest. A cynic might suspect this was how it was designed to be. But what it's done to the economy is worse.

In eye-opening testimony to the House Financial Services Committee Tuesday, American Enterprise Institute fellow Peter J. Wallison said: "I believe that all the new regulation added by the Dodd-Frank Act in 2010 is the primary reason for the slow growth this country has experienced since 2010."

For the record, Wallison isn't just another anonymous "expert" or media pundit. He was a member of the Financial Crisis Inquiry Commission and co-chair of the Financial Reform Task Force in 2009.

And unlike many pundits still sounding off, he warned loudly and often in the early 2000s that our banking system was in danger of going off the rails. Later, he warned about Dodd-Frank's many flaws. Both times he was ignored; both times ended in disaster.

In the 23 quarters since the recession ended, economic growth has averaged a meager 2.2%.

As former Sen. Phil Gramm, an economist, recently noted, if this recovery had merely been as strong as the average post-World War II recovery, we'd have had 14.4 million more jobs, and...

[Wolfie]

Dodd-Frank was nothing more than a dog-and-pony show for the American public. A Potemkin Village designed to convince us that something was being done while making sure nothing actually threatened the iron grip of the Banksters. If they wanted to fix “too big to fail” they would have simply re-instated Glass-Steagall. But the Banksters would not go for that.

[Cringing Negativism Network]

America now runs a 342 billion dollars / year trade deficit with the People’s Republic of China.

That is what is wrong.

Both parties, have sold out America.

[expat_panama]

Sweet!  We're waking up to futures trades +0.18% on both stocks and metals this morning!  This after yesterday's solid stock gains in rising volume --NASDAQ even clawed back up over the 50 day moving average--  as metals continue to hold steady..  There's even stuff for the 'all is lost' crowd:

• Fed expected to push ahead with rate hike plan  WASHINGTON The Federal Reserve is expected on Wednesday to point to a growing U.S. economy and stronger job market as it sets the stage for a possible interest rate hike in September.  Reuters - 5 hours ago
• Problem w/the White House Threat to Veto REINs - Wayne Crews, Forbes
• Hillarynomics: An Unoriginal Mess of Bad Policy - Charles Gasparino, NYP

[C. Edmund Wright]

It was dog and pony, but much more malignant than that too. It was Orwellian....get the two biggest defenders of Fannie and Freddie to correct the problems caused by Fannie and Freddie (in large part).

[C. Edmund Wright]

and yet, you remain clueless as to how policies like Dodd Frank are killing us......just effen amazing. How can so much passion reside in the same being with so little intellectual curiosity? It really is amazing.

[Common Sense 101]

A cynic might suspect this was how it was designed to be.

As with all Demonic Party policies, that's exactly what it was intended to do, along with diminish the U.S. economy. What is easier to control - a multitude of flourishing small and regional banks or a paltry few multi-national banks? The Demonic scum, as always, design their regulation and legislation to control everything, to ensure that their vile and perverted worldview benefits only them and their cronies.

[expat_panama]

a 342 billion dollars / year trade deficit with the People’s Republic of China.

The priority is whether making China suffer a little is worth having America suffering a lot.  Right now our China imports are almost double what they were in early '09 as our over all trade deficit was almost half then what it is now.  As bad as we may say things are now, they were worse in early '09.

[expat_panama]

clueless as to how policies like Dodd Frank are killing us..

You're right, we really do need to focus.

[bert]

that deficit is not a problem and unrelated to the thread

The deficit is not of sovereign origin but between customers and vendors

[C. Edmund Wright]

Right.....beat China...but NOT by “punishing jobs and money” and not by obsessing about China. Beat China by unleashing American freedom and liberty - things China cannot compete with. Beat China by exporting American liberalism off shores.....if you do that, far fewer jobs will go offshore.

[C. Edmund Wright]

good one....I bet CNN runs a deficit with his pharmacy, and with his grocery store...and I bet CNN’s employer runs a deficit with CNN......but on the other hand, CNN runs a surplus with his employer.

[sauropod]

The investors.com site locks up when i open it.

Poor design.

[mad_as_he$$]

Yea well the to big to fail line is a joke. Derivatives are even bigger now than 2008 and most are a garbage salad.

https://www.google.com/#q=derivatives+bubble+explained

[Lurkina.n.Learnin]

Wonder if Dodd Frank had anything to do with this?

Weird: Only 3 new U.S. banks opened since 2010
http://www.freerepublic.com/focus/f-chat/3318006/posts

[Texas Eagle]

It sounded good at the time. But in fact, it's had the exact opposite effect, leading to a decline in small banks and rising market share for the very largest. A cynic might suspect this was how it was designed to be.

If by "cynic" you mean someone with a functioning brain.

[Georgia Girl 2]

It put me out of business in June 2010.

[expat_panama]

hmmm. When I find that w/ some site I try it w/ a different brand browser. Just opened IBD w/ firefox & it worked ok. imho IBD really needs to dump a lot of their useless bells’n’whistles tho...

[palmer]

That is what is wrong.

The trade deficit is a symptom of many problems (high corp taxes, regulations, etc) not the root problem.

Both parties, have sold out America.

That's true and there are many reasons that overlap with the problems that create the trade deficit. For example, high corp taxes are used to squeeze corporations for campaign donations in exchange for tax breaks. Regulations are mainly to benefit one corporation or industry at the expense of others. They both talk about the American people but the politicians are beholden to Wall St and Wall St likes trade deficits.

[Mase]

If they wanted to fix “too big to fail” they would have simply re-instated Glass-Steagall

Bringing back Glass-Steagall wouldn't change much. The banks got into financial trouble because of MBS. Banks have always been able to invest in MBS -- before and after GS.