Let the market work its magic. Take a lickin' and keep on tickin'.

Elizabeth Warren reminds me of that “Hang in there” poster of a cat clawing desperately at a ledge. Power is slipping from the claws of he left and she thinks she can fool us again with her save Dodd-Frank ploy.

  There is much to abhor in the $1.1 trillion Crimenobus bill, but we should celebrate any attempt to repeal that pernicious 2,000 page monster, the Dodd-Frank Consumer Protection Act. Don’t be fooled by the titles of bills.  They are purposely designed to mislead us.  Remember Gruber?  Consumer protection really means protecting my big pocket friends from consumers.

Dodd-Frank was supposedly passed to prevent another financial crisis. Because of Dodd-Frank regulations, this economic recovery has been the most anemic on record. It’s a typical government response.  Government causes a problem and then passes legislation that exacerbates the problem.

It wasn’t deregulation of the banks that caused the financial crisis.  Check your history.  There was no deregulation of banks during the Bush and Reagan years.  Even the Federal Reserve investigation showed that it was overregulation that strangled the economy. Dodd-Frank just made it worse.  Small banks were squeezed out of business because they couldn’t deal with it.  Large banks just hired more compliance officers.  J.P. Morgan Chase alone hired 10,000 of them to deal with the mess.

Over regulation put pressure on the economy and the Community Reinvestment Act blew it all apart. Banks were forced under CRA to make loans to “underserved communities” which inevitably included borrowers whose credit standing did not qualify them for a conventional loans.  By 2008 roughly 58% of all U.S. mortgages—32 million loans—were subprime low quality.  The action over inflated market and humpty dumpty had a great fall and all the kings horses….  

There was no evidence that banks trading securities had anything to do with the financial crisis but legislators had to blame someone for their crimes so they pounced on Wall Street.  Class envy makes the rich an easy target.

The solution is not regulation.  The solution is get rid of the notion of “too big to fail, and at least the Cromnobus opened the door on that issue by not allowing the government to bail out insurance companies.  The solution is let the market work its magic, take a hit and keep on truckin’.