Undoing President Obama’s Damage Will Take Time

RealClear Markets covers the Systemic Risk Designation Improvement Act of 2017.

Indeed, another reason to oppose new government undertakings is that each creates groups that benefit from or become dependent on such endeavors, and therefore possess strong incentives to protect and expand those benefits no matter how costly or destructive they might be.

And then there’s the Dodd-Frank financial regulation legislation, also signed into law in 2010. As a knee-jerk reaction to the credit mess of 2008-09, Dodd-Frank failed to deal with actual causes of the meltdown. For example, nothing was done to stop the federal government from pushing a dubious “affordable housing” agenda through, for example, Fannie Mae, Freddie Mac, and the Community Reinvestment Act, passed by Congress in 1977 and revised in the 1990s. In summary, federal lawmakers for decades pushed a political agenda that de-coupled swathes of mortgage lending from economic reality. That very much continues today

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One smaller measure worth taking note of is the Systemic Risk Designation Improvement Act of 2017, which has sponsors from both sides of the political aisle – Democrat Claire McCaskill in the Senate and Republican Blaine Luetkemeyer in the House, both from Missouri. It’s an effort to lift some of Dodd-Frank’s most onerous regulations from the backs of smaller regional banks.

As Daniel Press from the Competitive Enterprise Institute has written, the bill “directs the Federal Reserve to look at interconnectedness, cross-border activities, and complexity when assessing their regulatory requirements, not just size. Currently, the $50 billion limit is an arbitrary designation that subjects medium-sized regional banks, which range somewhere between $50 billion and $250 billion in assets, to the same standards as large, multi-trillion dollar banks. This change makes sense, as regional banks that predominately take deposits and have little exposure to derivatives or trading are clearly not ‘systemically important’ as defined by Dodd-Frank.”

Read the full article at RealClear Markets.