Professor Cochrane and Dodd-Frank

Professor John Cochrane of the University of Chicago opines today on the implementation of "too big to fail" in the Dodd-Frank legislation in the Wall Street Journal. As Professor Cochrane notes, the Dodd-Frank structure has nothing to do with the problems that beset the financial industry in the 2008 collapse but instead empowers arbitrary control of the US financial institutions by an unelected bureaucracy, accountable to no one.

Cochrane, correctly, redirects our attention to the stifling impact the Dodd-Frank "reforms" are having on our financial system and, as a result, on our economy. Economic stagnation by design. That's the Dodd-Frank regime.

The spirit of Dodd-Frank has breathed life into an anti-lending campaign by bank regulators the past two years. The result -- a bifurcation in the lending market. For those who don't need credit, it is available in abundance. For those who need credit, it is prohibited by the activities of the regulators. Obama could change this, but he chooses not to.

The time to tighten lending standards is during the boom, not during the bust. Tightening lightening standards during the bust just prolongs the bust. Why isn't that obvious?

Comments

Post a Comment

Popular posts from this blog

"You Can Keep Your Existing Health Insurance"

I wondered about this statement at the time Obama made it.  Clearly, by changing all the rules of health care insurance and mandating conformity, it was unlikely that the vast majority of Americans would not find themselves forced by 'The Affordable Care Act' to have to deal with a completely different health insurance plan and completely different set of health care providers. I now understand what Obama meant.   He was speaking to his immediate family and (politician) friends.  They are exempt from the "Affordable Care Act."  Clearly what he meant to say was: "if you are exempt from Obamacare, like me and my family, you can keep your existing health insurance."  He never meant to mislead.
Read more

Work Ethic of 70s, 80s, 90s

Image
Different generations have their own view on working. You like it or not, working is part of our live. No work = No life. However, this equation has since changed to " Working = No life ". Do you agree? Generally, those born in 70s were perceived to be loving their job. They work hard mainly because of 3 meals/day. For them, a secured life means having a stable job with stable income. They believe that with every efforts you put in, that will reward you back later. As such, over time (OT) is nothing for them. As a responsible 70s, losing their job is a serious matter they tend to avoid. That's why they usually found another job first, before resigning. How about 80s? Other than chasing for stable income, those 80s working adults will also look into the job scope , opportunity for promotion , or working environment . They will take initiative to find for better job. Hence, job hopping is very common for them. Notably, 80s are reluctant to sacrifice their quality of life b
Read more

Things We Now Know

The poor are losing ground in the new Obama world.  The facts are showing up even in the halls of collectivist extremes like the New York Times.  The rich are getting richer and poor are being locked in place.  Big government is throttling the economy and the hopes and dreams of lower and middle class Americans. Today's Wall Street Journal's article by Simon Constable lays out some of the simple and obvious facts of the Obama era: "The richest 20% of households account for 38% of spending, according to government data for 2011, the latest available.  Compare that with 2003 when the top earners spent 26% of the total."  The article goes on to say..."it could get even worse."  It will. Who really benefits when the regulators strangle the banks?  Do banks really need to get much more conservative in their lending practices?  Why does the government know best?  How far can you stretch the FDIC guarantees before American banking is simply a subsidiary of the US g
Read more