Dodd-Frank is a triumph of overreach unrelated to problems

Instead of addressing the obvious flaws that led to the very real financial crisis that began in 2008, the Dodd-Frank bill’s labyrinth of regulatory overreach and ill-conceived changes is certain to injure our economy for years if not decades to come.

The fundamental principle of any reform has to be getting the right diagnosis, because without that you cannot possibly hope to find the right cure. The Dodd-Frank bill fails that crucial test in several ways.

First, and most importantly in this period of high unemployment, there is nothing in this bill that will help create jobs and much that will impede us in that goal. Through its numerous provisions that ban and ration credit products, make credit more costly and less available, and reduce consumer choices, the Dodd-Frank bill will be a private-sector job killer at a time when government policy ought to create an environment where private lenders lend responsibly to creditworthy consumers and small businesses. In fact, the only professions that may benefit from this bill are trial lawyers and government bureaucrats.

That sad fact gives way to yet another critical flaw in the Dodd-Frank bill: Massively expanding the size of government’s regulatory bureaucracy with new layers, agencies, and required rulemakings does not mean that oversight will get any better. In all likelihood, consumers will be worse off as the new alphabet soup of merged and restructured agencies struggle to organize, hire staff, stake out their jurisdictions and write an estimated minimum of 12 new government reports, 44 studies, and 243 new rulemakings required under the bill. All the while, banks and investors will sit cautiously on the sidelines waiting out the regulatory uncertainty of Dodd-Frank before they resume lending, Thus hampering our prospects for economic growth.