Reforming the wrong regulators

Opinion Journal:

President Obama hailed the financial bill that House-Senate negotiators finally vouchsafed at 5:40 a.m. Friday, and no wonder. The bill represents the triumph of the very regulators and Congressmen who did so much to foment the financial panic, giving them vast new discretion over every corner of American financial markets.

Chris Dodd and Barney Frank, those Fannie Mae cheerleaders, played the largest role in writing the bill. Congressman Paul Kanjorski even offered a motion to memorialize it as the Dodd-Frank Act. It's as if Tony Hayward of BP were allowed to write new rules on deep water drilling.

The Federal Reserve, which promoted the housing mania and failed utterly in its core mission of monitoring Citigroup, will now have more power to regulate more financial institutions and more ability to dictate the allocation of credit.

The Treasury, which bailed out institutions willy-nilly without consistent rules, will now lead the Financial Stability Oversight Council that will have the arbitrary power to define which financial companies pose a "systemic risk" and which can be shut down without recourse to bankruptcy. Willy-nilly will now be the law.

And the SEC, which created the credit-ratings oligopoly and missed Bernie Madoff, will get new powers to decide how easy it should be for union pension funds to get their candidates on corporate proxy ballots.

Oh, and Fannie Mae and Freddie Mac? They aren't touched at all, even as they continue to lose billions of taxpayer dollars each quarter.

In other words, our Washington rulers have taken 2,000 or so pages to double and triple down on the old system that failed.

...

Barney Franks and Chris Dodd have performed one of the biggest scams since Bernie Madoff. Both were in part responsible for Fannie and Freddie's irresponsible behavior and if those two entities shad been properly managed and regulated there never would have been a financial debacle to begin with. Now here they sit still gobbling up money and buying loans of dubious quality with no appreciable reform efforts. It should be noted that the Bush administration attempted reform early in the decade and it was Franks and Dodd that helped to kill it.

Democrats seem to think this regulatory scam is going to get them some cred with the voters, but I think they are mistaken. The biggest beneficiary of this new legislation will be lawyers who are paid by the hour to read it and advise their clients and lobbyist who try to deal with it. I pity the in house lawyers who will have to try to make sense of this mess earning Chinese overtime, i.e. the more hours they work the less they are paid per hour.