Deregulators Can Wreak Havoc on the Economy
Deregulation once nearly destroyed our economy.
Feb. 25, 2011 — -- I understand that deregulators are committed to an ideology. We all need something to believe in, after all, and they believe in the power of markets to both create growth and self-regulate.
That's all very nice and looks good on paper, but given the past few years, that argument simply doesn't pass the straight face test. I mean, let's be real, deregulation nearly destroyed our economy as the past few years clearly demonstrate. But the deregulators aren't giving up… and maybe they won't until they've finished the job.
To quote Ronald Reagan, "There you go again."
When the CARD Act was enacted, followed by the passage of the Dodd-Frank Act, I — along with almost every person who fogged a mirror in Washington — heard that the financial services industry was telling their constituent members, "Fear not, we have two more bites at the apple" – when the regulations are promulgated to flesh out the broad mandates of the laws and when budget time rolls around.
[Related: Are CARD Act Critics in Complete Denial?]
Well, they didn't do so well at the first tranche of regulations, but I draw your attention to Section 1517 of the Continuing Resolution to fund government operations (also known as "Scream 5," or the $60 billion budget slash fest).
The TGODs (the folks who wish to return to The Good Old Days) have slipped in a tiny provision that restricts the annual budget for the Consumer Financial Protection Bureau to $80 million in Fiscal 2011 (which ends in October). This is a reduction from $143 million and couldn't come at a worse time for the regulator, or a better time for the regulated.
Reps. Barney Frank, D-Mass., Rush Holt, D-N.J., and Brad Miller, D-N.C. —(collectively "FHM") — sent a letter to their colleagues saying that this "is a clear attempt to hamstring the new, independent agency as it hires staff and begins the critical work of providing clarity and security to the system of consumer finance."
