Saturday, July 17, 2010

How Much Regulation is Packed in the Finance "Reform" Bill?

As I have outlined below, the new bills passed by Congress with regard to healthcare and financial reform are likely to result in huge changes in life in America. Here's Mark Perry explaining just how physically big the financial "reform" bill is relative to other historically significant financial bills:

Now that Congress has passed the “Dodd-Frank Wall Street Reform and Consumer Protection Act,” it might be a good time to compare the 2,319-page financial reform bill (245 pages longer than the healthcare bill) to the previous bills listed below (and see graph) that are considered among the most consequential legislative acts for banking and finance.

1. Federal Reserve Act (1913) - 31 pages.

2. Glass-Steagall Act (1933) – 37 pages.

3. Interstate Banking Efficiency Act (1994) – 61 pages.

4. Gramm-Leach-Bliley Act (1999) – 145 pages.

5. Sarbanes-Oxley Act (2002) – 66 pages.

Further, keep in mind that although this bill is 2,319 pages, in many places the actual instructions in the bill state, "the regulator shall determine...". This means the entrenched Washington D.C. bureaucracy will have enormous power to micro-manage the financial sector, coupled with the new interventionist, miro-management oriented heads, appointed by Obama to the new agencies.

This is an extremely dangerous bill, second only to ObamaCare. This bill will  kill off the old style way of doing things. It's going to be all about insider connections and political correctness. The insider connections are about eventual payoffs to bureaucrats in terms of jobs, as long as rules are interpreted a certain way by the bureaucrats for the insiders. The political correctness will come in the form of favorable rulings for politically connected groups that can deliver votes for the corrupt political class.

Innovation and economic growth will be severely damaged by this bill. The GDP numbers won't say so, but you will know and feel things are different, and not for the good.


  1. Welcome to patronage nation. The way things were and are done over most of the earth for most of human history.

  2. They are pushing a climate of absolute uncertainty and fear for one's future. People are going to crack and do something that will trigger the revolution.

  3. Of note is the fact that the bureaucracy does not change with the election-cycle, only the politicians above them do. This allows for "regime continuity" where it really counts. Far from being a boon to the market, it means the political elites can guarantee that while the names and faces in the suits on Capitol Hill might rotate, the real gears that need greasing will always be turning in their place.