Avik Roy explains in the latest issue of Forbes magazine why conservatives ought to be talking about an alternative to harmful Obama administration financial regulations.
It’s easy to forget, but the Tea Party emerged not in response to ObamaCare, nor illegal immigration, but to the aftermath of the 2008 financial crisis. So why is it that the Tea Party’s Republican allies have been mostly silent on the issue of Wall Street reform? …
… Average Americans of both parties hated the Wall Street bailouts. They resented the fact they were being forced to suffer through a difficult economy, with no recourse, while banks with hundreds of billions of dollars in capital received taxpayer-funded relief.
A narrative set in—fueled by a liberal media, Democratic victories and Republican quietude—that greedy bankers took advantage of an unregulated financial system to cause the financial crisis. As a result, the primary catalysts of the crisis—Washington policymakers—were let off the hook. …
… Dodd-Frank has hardly solved the problem of banks that are too big to fail. Since the financial crisis, one in four community banks—nearly 2,000 of them—have closed their doors. Meanwhile, the banks that were supposedly too big to fail in 2008 have only gotten bigger. So how big will the bailouts need to be during the next crisis?
Furthermore, Dodd-Frank didn’t address the proximate cause of the financial crisis: the housing bubble. Indeed, the Federal Reserve has created a new bubble by keeping interest rates too low for too long. Fannie Mae and Freddie Mac have reduced their down payment requirements to a mere 3%. …
… It would be great to see the 2016 GOP field engage in a robust debate about how best to end the era of bailouts and crony capitalism. If that debate doesn’t happen, Republicans will have only themselves to blame for the result.
