The financial regulatory bill is supposed to keep another financial crisis from happening. But Dodd says?

"We don’t know ultimately how well the ideas we’ve incorporated here will achieve the results we desire. It will take the next economic crisis, as certainly it will come, to determine whether or not the provisions of this bill will actually provide this generation or the next generation of regulators with the tools necessary to minimize the effects of that crisis when it happens." So they are planning on regulating us out of prosperity and they still are expecting more financial collapse. How comfortable are you with this?

This is precisely why lawyers should not craft economic policy nor design financial instruments. They don’t understand them or how they work.

In the big picture, I think this goes back at least forty years to the first heavy rounds of industrial regulation. For quite a time, until the mid-90s, the momentum was towards deregulation. Allow more competition, fewer restrictions and rules.

Now, especially with the financial crisis, the momentum is swinging back the other way towards more regulation. Note I don’t say GOOD regulation. Dodd et al will never be able to outlaw greed nor remove incentives for profit. Well, actually they could eliminate all profit incentives but we would rather not have the entire economy brought to its knees. Well, i’d rather not see that anyway.

Point is, this bill at least isn’t as bad as the first version (which would’ve broken down all major banks and taxed the heck of out depositors) but it still reflects the wrong response. The system is not fundamentally broken and it doesn’t need an absolute overhaul. if we think the problem is with excessive speculation on financial derivatives, fine let’s regulate how much a bank can throw at those derivatives and make all such transactions across transparent markets. I can deal with that – it’s a small (relatively speaking) loss of economic activity.

What I don’t understand is why:
* They want to tax banks for holding consumer’s money in savings accounts (ie, the liabilities tax, since deposit accounts are a liability)
* They want to change the way agricultural futures and derivatives are traded – this is how most farmers and small businesses make a living, it helps them to balance out the fluctuations in food costs. This can’t be understated – if our farmers aren’t able to protect themselves financially from droughts or oversupply of crops, our food supply is at risk because the suppliers of food are going to leave the market. There’s also no abuse here – the economic crisis was NOT brought about because of excessive speculation on winter red wheat.
* They want to change how we buy insurance. I like our insurance. If we want to expand how many people get isnurance, why not subsidize it? Why does it take an entirely new administrative entity to tell me that I’m allowed to buyt he insurance my company offers as a benefit?