Morning Bell: Bigger Government Is Not the Solution to Big Government Problems

Conn Carroll / March 11, 2010

The final details of the financial regulatory reform bill being negotiated by Sens. Chris Dodd (D-CT) and Bob Corker (R-TN) are still being hammered out, but the underlying contours are clear: more government bureaucracy layered on top of our existing impenetrable and unaccountable financial regulatory system. Specifically, the Dodd/Corker plan reportedly still contains these elements:

The Consumer Financial Protection Agency – There is still debate over whether this new entity will be a stand alone agency, housed in the Department of Treasury, or housed in the Federal Reserve. Wherever the new entity ends up, the bottom line will be the same: a massive new bureaucracy afforded ambiguous grants of almost unlimited power. Although intended to help consumers, the net result of such a move would be to stifle the innovations that would bring them improved, lower-cost financial products.

Permanent TARP – Details are sketchy here, too, but reports are that federal bureaucrats, possibly the FDIC, will be given new “resolution authority” powers backed by a permanent $50 billion slush “resolution fund.” If this new power is given to the FDIC, it would be the first time the FDIC’s authority was extended beyond the banks that it directly insures. But more importantly, these provisions would establish a permanent TARP – the radioactively unpopular $700 billion Wall Street bail out slush fund. (more…)