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Trump’s Secretary of the Treasury Has Some Bad News for the Socialists
I’m not a big fan of putting billionaires in charge of federal agencies, but the exception I’m willing to make is Treasury and Commerce because you want someone who’s actually been successful in business in positions that determine if other folks get a chance to make some, too. Not some political hack obsessing over which politically correct face is going to be on the US currency.
Today Donald Trump’s Secretary of the Treasury-designate, Stephen (I’m glad I’m writing it so I don’t have to say it) Mnuchin appeared on CNBC’s Squawk Box and gave some insight into what his priorities are:
The Trump administration plans to target the Dodd-Frank financial regulation law as a way to stimulate economic growth, Donald Trump’s pick for treasury secretary said Wednesday morning.
Steven Mnuchin, a long-time Goldman Sachs banker tapped by Trump to lead the Treasury, told CNBC’s “Squawk Box” Wednesday morning that going after the law will be one of his top priorities.
“The number one problem with Dodd-Frank is it’s way too complicated and it cuts back lending, so we want to strip back parts of Dodd-Frank that prevent banks from lending and that will be the number one priority on the regulatory side,” Mnuchin said. “The number one priority is going to be make sure that banks lend.”
Mnuchin, who has never served in government, said his private sector experience showed him the law’s flaws.
Dodd-Frank is one of those laws conceived in the aftermath of the financial collapse of 2007-2008 and epitomizes Rahm Emanuel’s saying of ‘never let a serious crisis go to waste.’ The Democrats, then in control of both Congress and the White House, rammed through a package of neo-socialist proposals packaged as consumer protection… because, no one, you know, wants to protect the consumer more than Congressional Democrats. By even the most charitable estimates Dodd-Frank has been the colossal failure that it was predicted to be. It has stunted the economy and wreaked havoc in virtually every business it has touched.
Before Dodd-Frank, 75% of banks offered free checking. Two years after it passed, only 39% did so—a trend various scholars have attributed to Dodd-Frank’s “Durbin amendment,” which imposed price controls on the fee paid by retailers when consumers use a debit card. Bank fees have also increased due to Dodd-Frank, leading to a rise of the unbanked and underbanked among low- and moderate-income Americans.
Has Dodd-Frank nevertheless made the financial system more secure? Many of the threats to financial stability identified in the latest report of Dodd-Frank’s Financial Stability Oversight Council are primarily the result of the law itself, along with other government policies.
Dodd-Frank’s Volcker rule banning proprietary trading by banks, and other postcrisis regulatory mandates, has drastically reduced liquidity for making markets in fixed-income assets. The corporate bond market is one of the primary channels for capital formation in the economy. Reduced liquidity in this market amplifies volatility. Because of Dodd-Frank, financial markets will have less capacity to deal with shocks and are more likely to seize up in a panic. Many economists believe this could be the source of the next financial crisis.
Dodd-Frank’s scheme for regulating derivatives markets concentrates systemic risks into clearinghouses and then designates the clearinghouses as too big to fail. Dodd-Frank’s “orderly liquidation authority” enshrines taxpayer-funded bailouts into law. Meanwhile, the Fed, by keeping interest rates too low for too long, is introducing dangerous imbalances into financial markets and is likely inflating asset bubbles.
What is most disturbing about Dodd-Frank is the authority it gives bureaucrats to control huge swaths of the economy. The director of the Consumer Financial Protection Bureau, an agency created by Dodd-Frank, can declare any consumer-credit product “unfair” or “abusive” and outlaw it. Oversight? CFPB funding is not subject to congressional appropriations, and Dodd-Frank requires courts to grant the bureau deference regarding its interpretation of federal consumer-financial law.
The fact that Dodd-Frank is under the gun hopefully means that the CFPB will be vaporized as part of the repeal package.
If Trump does nothing else in his term, repealing Dodd-Frank will be a huge service to the nation.
The post Trump’s Secretary of the Treasury Has Some Bad News for the Socialists appeared first on RedState.
Source: http://www.redstate.com/streiff/2016/11/30/trumps-secretary-treasury-bad-news-socialists/
