“In the postcrisis environment, most in Washington had a strong incentive to scapegoat Wall Street. Former Sen. Chris Dodd and former Rep. Barney Frank, champions of the federal government’s deleterious affordable-housing goals for Fannie Mae and Freddie Mac,…

…had the honor of drafting new banking rules that punished Wall Street while leaving all stones unturned with regard to Washington’s role in incentivizing bad lending behavior, creating the housing bubble and sparking the financial meltdown. Mr. Bernanke’s failure to challenge the convenient untruth that Dodd-Frank was needed to hogtie the financial-crisis perpetrators is of much greater significance than merely pointing the finger of blame in the wrong direction, as Mr. Wallison points out. With Dodd-Frank as the leading edge of a regulatory state onslaught, it appears that the U.S. settled into a GDP growth trajectory that is 1% to 2% less a year than normal—i.e., a growth rate more typical of European welfare states……Democrats will be calling for additional transformational policies that take us further away from America circa 2006 and closer to today’s Europe. It behooved Washington to kick the stuffing out of unpopular bankers who furnished much of the capital that drives capitalism. Mr. Bernanke consciously or inadvertently turned a blind eye to the root-cause misdirection, and we may be suffering from the economic consequences for many years to come.”, Paul Douglas, Jacksonville, Fla., The Wall Street Journal Letters to The Editors, November 10, 2015

“Peter Wallison has it exactly right when he mentions Messrs. Dodd and Frank and their role in the housing bubble that led to the financial collapse. How ironic that Messrs. Dodd and Frank, the very men who were most responsible for the collapse, got legislation named for them, ostensibly to fix the problems they had created. Only in Washington, D.C., does that seem normal.” Stephen W. Reed, Pasadena, Calif., The Wall Street Journal Letters to The Editors, November 10, 2015

Opinion Letters

The Courage to Act, but Often Suboptimally

In the postcrisis environment, most in Washington had a strong incentive to scapegoat Wall Street.

Regarding Peter Wallison’s “Bernanke and the Slow-Growth Crew” (op-ed, Nov. 5): In the postcrisis environment, most in Washington had a strong incentive to scapegoat Wall Street. Former Sen. Chris Dodd and former Rep. Barney Frank, champions of the federal government’s deleterious affordable-housing goals for Fannie Mae and Freddie Mac, had the honor of drafting new banking rules that punished Wall Street while leaving all stones unturned with regard to Washington’s role in incentivizing bad lending behavior, creating the housing bubble and sparking the financial meltdown.

Mr. Bernanke’s failure to challenge the convenient untruth that Dodd-Frank was needed to hogtie the financial-crisis perpetrators is of much greater significance than merely pointing the finger of blame in the wrong direction, as Mr. Wallison points out. With Dodd-Frank as the leading edge of a regulatory state onslaught, it appears that the U.S. settled into a GDP growth trajectory that is 1% to 2% less a year than normal—i.e., a growth rate more typical of European welfare states. A marginal slowdown in annual growth has a very meaningful effect on a nation’s aggregate wealth after a decade or two. A 1% a year growth slowdown can produce a 20% shortfall in wealth growth over a quarter century, exacerbating all types of economic strains and social ills; and as problems intensify, future socially conscious Democrats will be calling for additional transformational policies that take us further away from America circa 2006 and closer to today’s Europe. It behooved Washington to kick the stuffing out of unpopular bankers who furnished much of the capital that drives capitalism. Mr. Bernanke consciously or inadvertently turned a blind eye to the root-cause misdirection, and we may be suffering from the economic consequences for many years to come.

Paul Douglas

Jacksonville, Fla.

Peter Wallison has it exactly right when he mentions Messrs. Dodd and Frank and their role in the housing bubble that led to the financial collapse. How ironic that Messrs. Dodd and Frank, the very men who were most responsible for the collapse, got legislation named for them, ostensibly to fix the problems they had created. Only in Washington, D.C., does that seem normal.

Stephen W. Reed

Pasadena, Calif.

Posted on November 12, 2015, in Postings. Bookmark the permalink. 1 Comment.

  1. Really good stuff, Mike…others are joining you in this chorus!

    Mark Nelson 3256 Sitio Tortuga Carlsbad, CA 92009 760.473.7558 mnelson.doit@gmail.com

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: