Successful Banking Regulations

Introducing prudent banking regulations after a financial crisis is an important step towards safeguarding democracy and prosperity. The Dodd-Frank Wall Street and Consumer Protection Act, adopted by the United States Congress in 2008, is no different. In the eight years following its passage, the American banking sector grew while maintaining accountability to the government and serving the interests of the public. In that period of time America saw robust economic growth and no major crises. As a response to this outcome, the current Congress has proposed the Financial Choice Act—a law that would abolish the Dodd-Frank Act. Whaaat? 

Why are we trying to abolish regulations that led to such significant improvement?

The logic behind this initiative, like many other harmful agendas, is the conviction that regulation hurts freedom and leads to stagnation. The Financial Choice Act’s proponents espouse a well-known lyre: no regulations lead to good results and let new possibilities flourish in freedom. Paradoxically, the Dodd-Frank Act had directly led to these good results and new possibilities. Destroying the Dodd-Frank Act will invariably lead to the old patterns of behavior that brought about the financial collapse of 2008. We must do better. That means enacting as many regulations as necessary but as few as possible.