The financial industry constantly complains about the cost of complying with the new financial reform rules. But, if you think the cost of such rules is expensive, then you’ll really hate the cost of the next financial crisis.
The last crisis cost trillions of dollars and the country is still suffering from the worst recession since the Great Depression of the 1930s. There are still more than 10 million Americans unemployed, more than 15 million Americans underemployed, millions of Americans who lost their homes to foreclosure, more than 11 million Americans with mortgages higher than the value of their homes, and average home prices across the country are at the same level they were in 2002. Trillions of dollars of wealth, income, savings and so much more have been destroyed by the Wall Street created financial crisis and recession. (These and the many other costs are tracked at the cost of the crisis section of this website.)
That’s why the Dodd Frank financial reform law was passed and what the rules are designed to prevent.
They are not only meant to prevent another Wall Street created financial collapse and a Second Great Depression, but they are also meant to prevent the Wall Street banks from reckless trading and investments that will cause their failure and require yet another bailout. So, basically, the new financial reform rules are meant to keep Wall Street’s hands out of taxpayer pockets. The rules are designed to end taxpayer bailouts of Wall Street. No rules or no effective rules, then Wall Street will still be able to get their hands on taxpayer money.
Of course, that’s exactly what Wall Street likes. Of course, Wall Street is going to whine and complain about anything that changes that. Of course, Wall Street is going to make bogus claims that the rules will slow growth or increase employment or hurt their customers. Of course, they are never going to say that they are really worried about their revenues, profits and bonuses.
Of course, Wall Street is going to blame everything on the financial reform rules. Who wouldn’t like to do whatever they want and, when they get in trouble, get the government to bail them out? They get all the upside and taxpayers get stuck with the downside. Everyone would want that, but only Wall Street banks have that ability right now.
That has to end. That must be stopped. That’s what financial reform and the rules are trying to do and that’s why Wall Street, the big banks and their paid mouthpieces and allies hate it and are fighting so hard.
They want to go back to business as usual doing whatever they want and stuffing their pockets with billions in bonuses and sticking taxpayers with the bills for their failures. Their army of lawyers, lobbyists, PR flacks, spinners, ideological fellow-travelers, political allies, campaign contributors and paid mouthpieces from leading academic institutions, trade groups, industry groups and other front groups are engaging is a vicious, take-no-prisoners attack on the law and the regulators.
If you don’t think that’s right, then you have to support the regulators who are trying to pass rules to change Wall Street’s business as usual and protect taxpayers from Wall Street. That’s what financial reform is all about.