The Truth About Financial Reform: It’s A Big Fat Failure

July 15, 2010 09:53

The financial-reform bill that hits the president’s desk this week is a 2,500-page failure that will only create more problems for federal regulators, argues former SEC Chairman Harvey L. Pitt. Who actually knows what’s in the bill? Passing legislation without understanding its contents is akin to allowing inmates to run the asylum.

Harvey Pitt, The Daily Beast

Later this week, the president will sign the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the entire country will witness a “Thalidomide” moment—that special time immediately following a terrible crisis when our elected political leaders, summoning all the self-laudatory instincts they possess, pronounce the latest “crisis” solved by dint of legislative fiat.

Dodd-Frank will be our second such financial crisis/Thalidomide event since the new millennium, having been preceded by Sarbanes-Oxley just eight years ago.

As it was with Sarbanes-Oxley, we’ll be told that our last economic crisis was someone else’s fault (but never Congress’) and all we really need is a hefty dose of legislative medicine. And “hefty” doesn’t even begin to describe this dose of legislation. In 2,500 pages of dense prose, we’re about to receive legislation that could better be entitled “The Lawyers’ and Lobbyists’ Full Employment Act.” Which begs the question, what’s the likely impact of Dodd-Frank?

Christopher Chabris and Daniel Simons: Why Financial Reform Will Fail Here’s a scorecard for your consideration:


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