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7566285122_51a286ea3b_qBy Stephen Moore

In the Washington Times:

First, the Dodd-Frank regulations are causing one of the greatest consolidations of the banking industry since the Great Depression. Those indispensable small savings and loans that Jimmy Stewart operated in the movie “It’s a Wonderful Life” are disappearing from the American landscape. This is because only really big banks have the size to spread the costs of Dodd-Frank compliance officers and costs. So we have created a competitive advantage that allows the sharks to swallow the minnows. Meanwhile, the “too big to fail” safety net to Bank of America, Citi, and other titans exacerbates this cost advantage of big banks and thus makes bailouts even more likely in the future.

Second, Fannie Mae and Freddie Mac are engaged in the same low interest rate lending mania of 2004-07 and the Obama administration is on a Bush-like home-ownership push. Some Republican House heroes like Jeb Hensarling of Texas wanted to eliminate taxpayer subsidies to Fannie and Freddie but the housing lobby kept them alive. So now the two government enterprises are back issuing taxpayer guarantees on mortgages with as little as 3 percent down payment. Have we learned nothing at all?

Third, the Fed refused to raise interest rates off zero in September, and, hello, that easy money policy is how we got into the mess in 2000 and then in 2008. Wall Street cheered Janet Yellen’s decision to keep the cheap dollars flowing. Isn’t this all starting to sound familiar?

Read more from Stephen Moore at SupplySideEconomist.com

Photo Credit: Sue Waters