Letter to the Editor: Dodd-Frank Shields Fannie and Freddie

G. William Beale noted in his Commentary column, "Big regulations stifle small banks," that small banks are being crushed by pointless red tape due to the 2010 Dodd-Frank financial "reform" law, a 2,300 page "leviathan."

The Dodd-Frank law decreases competition in other ways that may end up costing taxpayers billions. It exempts the government-sponsored mortgage giants Fannie Mae and Freddie Mac, which have been bailed by taxpayers out at an ever-increasing cost that now exceeds $170 billion, from its regulations and restrictions, like the "qualified residential mortgage" provision. That leaves them free to traffic in mortgages that better-managed private institutions cannot touch due to Dodd-Frank.

That makes no sense, since the private banks paid back their bailouts, while thinly-capitalized, mismanaged government-sponsored enterprises like Fannie Mae failed to do so and survive only due to continuing taxpayer subsidies. Effectively, they are gambling at taxpayer expense, shielded against competition by the Dodd-Frank law.