On July 21, 2010, Congress passed the Dodd-Frank financial regulation bill. Today, that bill turns five. It is not a happy anniversary.
As CEI’s John Berlau points out in a new paper, Dodd-Frank has actually reduced competition in the financial sector. By codifying too-big-to-fail and adding in price controls and other regulatory hoops—27,669 total regulatory restrictions and counting—Dodd-Frank insulates incumbent banks from pesky upstart competitors. In fact, in the last five years, precisely one new bank has opened for business. This stagnation is not healthy for innovation or for competition—or for capital-hungry entrepreneurs throughout the economy.
A few other Dodd-Frank facts worth pondering:
- The original bill text is 848 pages long. The edition of Herman Melville’s Moby Dick on my bookshelf is 602 pages long.
- Dodd-Frank requires regulatory agencies to issue 398 regulations. Five years later, many of them have yet to be issued. Hopefully they stay that way.
- Since each of those regulations contain multiple regulatory restrictions (some of the rules are hundreds of pages long and are extremely detailed), the actual number of regulatory restrictions Dodd-Frank enacts could eventually top 40,000, or even 50,000. Nobody knows yet.
- Its price controls on debit card interchange fees have raised the cost of banking for small businesses and the poor (See Iain Murray’s new paper).
- Dodd-Frank does not address the root causes of the 2008 financial crisis—banks took on too much risk, especially in the housing sector. Instead, by codifying government bailouts for major financial institutions, Dodd-Frank reduces incentives for financial institutions to keep their risk at manageable levels. Whatever its stated intentions, Dodd-Frank potentially sets the stage for another financial crisis and more bailouts.
For more, see John’s extensive Dodd-Frank research.
John Papola strikes again with a brilliant bit of satire. Click here if the embedded video below doesn’t work, and the full Kronies website is here.
A recent ruling against Apple over its e-book pricing policies highlights the absurdity of antitrust laws, as I point out in the Daily Caller:
Under American anti-trust laws, there are three things no business should ever do. They are as follows: Charge higher prices than your competitors, charge lower prices than your competitors, and charge the same price as your competitors.
Higher prices mean that you have market power, and you are abusing it. Lower prices mean that you are trying to unfairly undercut your competition. And if you charge the same price as your competitors, that means you are colluding with them (although in economics, it can also be evidence of near-perfect competition).
It goes downhill from there. Read the whole thing here
Have a listen here.
Fellow in Consumer policy Studies Michelle Minton argues that the beer industry in America is essentially a monopoly. In her new paper “Avoid a Monopoly by Setting the Market Free: How the Mandatory Three-Tier Distribution System Inhibits Competition,” she argues that this monopoly is a regulatory creation, and offers ideas for reform.
Have a listen here.
Associate Director of Technology Studies Ryan Radia argues that Google’s current dominance as an Internet search engine service is a fragile thing. Creative destruction is everywhere, and its onset cannot be predicted. As soon as something better comes out, consumers will flock to it in droves. Calls for antitrust enforcement should not be answered.
Have a listen here.
The Washington, D.C. area was recently hit by a rare derecho storm, which is essentially a land hurricane. Three million people were left without power, some for more than a week — during a record-breaking heatwave. Pepco, the electric utility that serves D.C. and parts of Maryland, quickly drew the public’s ire. Energy Policy Analyst William Yeatman thinks the jeering public should look in the mirror. A government-granted monopoly and rampant NIMBY-ism are not a recipe for success.