Taking Steps To Improve America’s Economy

Yesterday Investor’s Business Daily posted an article about a bill that was recently approved by the House Financial Services Committee.

The article reports:

With little fanfare and even less media coverage, the House Financial Services Committee recently approved along party lines a bill that would significantly reform the economy-deadening Dodd-Frank law. It’s a good first step toward restoring our financial freedom.

The fact is, the 2010 Dodd-Frank law has been a disaster, responsible for killing hundreds of thousands of U.S. jobs and putting a damper on economic growth by making credit harder to come by for those who need it most.

In a recent interview with NPR, House Financial Services Chairman Jeb Hensarling of Texas made a succinct case for getting rid of Dodd-Frank: “Free checking at banks has been cut in half. Banking fees have gone up. Working people are finding it more difficult to get mortgages,” he said.

He could have gone further. Small- to medium-size banks — the traditional sources of working capital for small business — have been hurt worst by Dodd-Frank’s extensive regulations that impose billions of dollars in unnecessary costs each year. And rather than repealing too-big-to-fail for big banks, Dodd-Frank actually makes it all but certain that taxpayers will be asked to bailout big banks during the next downturn.

Dodd-Frank was passed with the idea that the banks and Wall Street were responsible for the financial meltdown of 2008. Actually, the government and government policy were much more to blame.

The best explanation I have seen of the cause of the financial crisis can be found in a YouTube video called “Burning Down the House.”

Here is that video:

The article at Investor’s Business Daily further explains:

Under regulatory threat from the government, banks made loans they knew were bad, then the government bought them back. When the Fed went too far in raising interest rates in the mid-2000s, the housing market cratered, banks’ balance sheets were destroyed, and a massive credit crunch and the “Great Recession” ensued. The government caused this crisis — not Wall Street.

As we’ve written repeatedly in the past, Dodd-Frank should have been shut down long ago. It has strangled entrepreneurial activity and dampened economic growth, and made it impossible for millions of Americans to get home loans. It’s a major reason why GDP during the Obama years grew at a pathetic 1.9% rate, rather than the more normal rate of 3% or more.

We hope the House will move quickly to end Dodd-Frank, one of the worst financial regulatory laws in modern history.

It is going to take a while, but the damage done to the American economy by the policies of Congress and the misdirected efforts to correct something that did not cause the problem can be corrected. We need both political parties to work together to make that happen. Unfortunately, I don’t think that is likely. Hopefully the Republicans have enough votes to pass this legislation without any Democratic votes.