The Dodd-Frank Folly

The bank bailout idea was a theoretical and practical failure; done by academics, in combination with Wall Street insiders with only securities trading background. Real banking acumen was missing.

They saw to it that banks acquired more clean capital and reserves, having gotten rid of some, not all of their questionable assets.

Government honchos have seen to it that banks now earn interest kept on reserves at the Federal Reserve. Banks can borrow from the Fed at practically no cost.

That adds to bank earnings. But regulators cannot force banks to make loans to their customers. Not when customers are spooked by anti-business  administration tax and anti-industrial rhetoric and policy.

In fact, banks are now sitting with loads of available cash for industry and consumers but relatively little is getting out. Because they are still afraid to lend it as they do in normal times. They can make more, investing in securities.

So much for the smart guys in government with trillions of inflationary bail out money. All they had to do to bail out banks in the first place, apart from seeing that banks added to capital, was guarantee their assets.

No inflationary bailout loot required. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)