Regulator tries to make sense of Dodd-Frank mess

NY Times:

John Walsh voiced the frustrations of many bankers when he warned in a speech last month that federal regulators were not paying attention to the cumulative impact of new rules and restrictions, jeopardizing the ability of banks to support economic growth.

“I might have titled these remarks, ‘Beware of the Pendulum,’ ” he said. “To put it plainly, my view is that we are in danger of trying to squeeze too much risk and complexity out of banking.”

What made the speech unusual was that Mr. Walsh is a federal regulator. In fact, he is responsible for overseeing most of the nation’s large banks. And as the text of his remarks ricocheted across the electronic landscape of official Washington, it drew a furious reaction from advocates of increased regulation, who called on the White House to replace him.

The uproar brought into public view the increasingly contentious relationship between the authors and supporters of the Dodd-Frank Act, the law passed last year to overhaul financial regulation, and Mr. Walsh, the acting comptroller of the currency, a crucial player in the work of translating the law into practice.

His agency is seeking to soften a wide range of provisions, in areas ranging from the bread-and-butter of consumer protection to the esoteric details of how much money banks can borrow. Democrats and consumer advocates are particularly infuriated because Mr. Walsh, who stepped in as acting director in August, could be replaced by the White House at any time.

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The main problem with Dodd-Frank it that it was part of a massive cover up of Democrat housing policies that caused the financial debacle. Instead of solving that problem, Dodd and Frank who were in part responsible for the debacle decided to blame the bankers who lost billions because of the housing scheme put together by Democrats beginning in the late 1970s and made worse under the Clinton administration. They kept the Bush administration from imposing tighter regulations of Fannie and Freddie and when then thing imploded they blamed everyone but themselves.

Even with Walsh's attempts to make sense of the Dodd-Frank mess this law is already choking the economy. It should be repealed and we should finally look at changing the disastrous housing policy before it brings us down again. Forcing bankers to make bad loans is just ridiculous and then punishing them with greater regulation when the loans go bad compounds the error.