Dodd–Frank, President Obama’s financial-regulation reform, had its two-year anniversary over the weekend. The act, spanning 2,319-pages, is an embodiment of former White House chief of staff Rahm Emanuel’s maxim to never let a serious crisis “go to waste.” Capitalizing on the fervor after the 2008 financial crisis, Dodd-Frank purported to promote financial stability, accountability, and transparency. Unfortunately, we would have all been better off if the crisis had been “wasted” than used to pass this legislation. Not surprisingly, much of why Dodd-Frank is damaging for our economy — including its massive regulatory structure and its contribution to economic uncertainty — could be remedied by addressing Dodd-Frank’s constitutional problems.
Dodd-Frank hurts our economy because one of its central premises is that bureaucratic experts with near-unlimited discretion make the best stewards of our economy. These experts believe that if they promulgate enough rules, they can somehow fix our complicated financial system. In Dodd-Frank, this has already led to more than 8,000 pages of regulations, and regulators are only about 30 percent finished.
This contributes to an increasingly regulated but tepid economic climate. As the Economist explained, Dodd-Frank “will smother financial institutions in so much red tape that innovation is stifled and America’s economy suffers.” The House Committee on Financial Services estimated that complying with the law will take about 24 million labor hours a year, or, as the Financial Services Roundtable explained, require that businesses hire about 26,477 personnel just to comply with those already-finalized regulations.
Well said.
