Politization as Regulation

The House of Representatives has passed Barney Frank’s financial regulation bill.   Among its provisions, it would create a new agency to protect people from financial practices that are already illegal.  It would also establish a means to dismantle large, failing financial firms, which some of us thought was the role of a bankruptcy proceeding.  But more than simply adding redundancy to the rules, Rep. Frank’s legislation would give regulators tremendous discretion and latitude, an arbitrary power that, if it does not protect Americans from the financial chaos that befell them in late 2008 – early 2009, would certainly politicize financial institutions and the financial sector of the economy.  To give us a taste of such a world, Rep. Frank recently suggested to financial executives that they fire the lobbyists who opposed his legislation.  It is the kind of Christmas present Washington increasing wants to power to give.  At least he refrained from President Obama’s sophisticated habit of name calling.