Harmful Regulatory Rules

A review of the Dodd-Frank Legislation is always in order as a lesson why intended regulatory rules never work in real life.

Such rules give regulators unlimited powers to do what corporate experts have always found difficult to accomplish. Still, politically-oriented bureaucrats attempt to undertake the tasks anyway, despite their lack of business acumen.

A Treasury committee determination of which financial entities pose systemic risk to our economic system is impossible in the real world, where risk is hard to identify. This cannot be easily done in the political world. Determining potential systemic risk is 100% conjecture. What steps to take, and when to take them, in order to eliminate problems, is not a practical matter.

Few experts in the business world have had the foresight to make the decisions for past incidents. Rarely do bureaucrats at the Fed or Treasury have the ability or objectivity. The Fed and the Treasury did a poor job with the past financial meltdown and bailout function. (See the Earl J Weinreb NewsHole® comments.)