Tuesday, April 5, 2011
Evidence against the Dodd-Frank Act continues to pile up. Now 18 Republican Senators have introduced legislation to repeal the act. It’s surprising that it took so long. The evidence against the act continues to pile up. Where to begin? Here are a few of the major features of the Dodd-Frank Act that raise questions about whether it should remain in force: • It strips the banking industry of the ability to engage in proprietary trading (the trading of fixed-income securities for the banks’ own accounts), a profitable activity that no one ever claimed had any role in the financial crisis. Removing the entire U.S. banking community from this market will reduce liquidity and widen spreads for all buyers and sellers of these instruments. Ultimately, it will move this business offshore, where foreign banks and other institutions will gain the benefits. No other country has moved to impose such a restriction on its own banks. • It authorizes a group of regulators, the Financial Stability Oversight Council, to designate certain large financial institutions—insurance companies, insurance holding companies, securities firms, banks, bank holding companies, hedge funds, finance companies, and others—as potential causes of financial stability and thus too big to fail. This would give these companies major competitive advantages over smaller companies, particularly in funding costs, and forever change the competitive nature of our financial system. [Read more at the above link] |
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