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Democrats such as House Financial Services Chairman Barney Frank and Senate Banking Committee Chairman Christopher Dodd have continued to press for what they consider to be necessary financial reform. Considering the track records of government officials who have overseen private industries (i.e., Barney Frank, Christopher Dodd, and former SEC Chairman Christopher Cox’s role in the 2008 meltdown of Fannie Mae and Freddie Mac, Charlie Rangel’s corrupt House Ways and Means chairmanship, and the near insolvency of direct programs such as Social Security and Medicare) it makes me wonder why exactly we would need more government regulation in the credit markets.
Rep. Frank has claimed that the regional Federal Reserve banks need to be restructured. According to Politico, Rep. Frank stated:
This notion where regional banks appoint a president and they control interest rates-that ought to be changed.
Another Politico article reports that the U.S. Chamber of Commerce claims that the new Consumer Financial Protection Agency (CFPA) that Sen. Bob Corker and Sen. Dodd are pushing would especially hurt competition for, “mom and pop businesses that had nothing to do with the financial meltdown in the first place.”
Also concerned with the size and scope of Dodd’s financial reform package, the Heritage Foundation has stated:
A good rule of thumb is that the quality of a financial reform package is usually inverse to its size and complexity. This is certainly true of the Dodd package, which is filled with poor policies and outright mistakes that should be quietly dropped as the Banking Committee develops alternatives. As the legislative process continues, the Dodd draft will be mainly useful as a guide of what not to do.
Ultimately, more government entrenchment in the credit markets does not look promising. Not only does it restrict constitutionally stipulated economic liberties, but it limits the free market’s capacity to achieve market efficiency. Instead of constantly intervening, the government should let market forces work and promote competition to correct the ills of the market.