Overregulation, a worry expressed by Donald Trump in the presidential campaign, diminishes freedom and stymies the economy. President Barack Obama is its champ. A major victory of his, therefore, was the hurriedly, recklessly passed Dodd-Frank financial reform law meant to prevent another 2008-style fiscal crisis.
Its failure is too big to ignore.
On top of rendering Wall Street biggies more vulnerable and less productive, enforcers of the inept mishmash are also messing destructively with small banks, in effect shortchanging their customers. They are lately going after life insurance companies, too, with reasons less than convincing.
The insurance issue has received attention in part because MetLife had the nerve to fight back in court against the Financial Stability Oversight Council, which deserves the acronym BULLY instead of FSOC. This Dodd-Frank creation wants to lump this major insurance provider in with big banks because, it says, its collapse would have a devastating impact on the financial system.
BULLY, however, neglected to show whether a collapse was likely and whether it would have the impact it alleged. The overbearing regulator also failed to assess what the costs of its assault on MetLife would be.
The procedure was against all regulatory rules, amounting to an arbitrary move that could make the company uncompetitive, and U.S. District Judge Rosemary Collyer was not exactly pleased. BULLY’s whole process was “fatally flawed,” she said in a decision favoring MetLife. She even pointed to evidence that MetLife would not damage the economy if its own business-life were surprisingly terminated.
BULLY’s honchos wondered what right a mere court of law had in intervening with its sacrosanct, administrative-state commandments and sought succor from Washington’s federal appeals court. The court held a hearing, throwing tough questions at both sides even as it is expected to favor BULLY.
In the interim, those speaking for MetLife have pointed out that life insurance companies are already capably regulated by the states. It’s true that AIG’s financial division got a federal bailout in the 2008 crisis, but its smoothly functioning insurance operations were not a problem. MetLife was denied the right to examine BULLY’s papers on the MetLife review, and one analyst says insurance purchasers hit with fewer policy choices and higher bills could be the group that ultimately pays.
All of this is just one recent example of how the federal government is ever marching forward to transform America into the land of the repressed and the home of the burdened. The Obama administration this year passed the all-time presidential record by its initiations over eight years of more than 600 major regulations, coming at an average cost each of $1.4 billion, costing the economy $743 billion, or $2,294 per citizen. The National Association of Manufacturers said the Obama labor regulations alone would cost $80 billion and 150,000 jobs.
The Wall Street Journal is among those editorializing that overregulation is scarcely a negligible reason for the worst economic recovery since World War II.
Particularly pernicious: Dodd-Frank, which so confused regulators they couldn’t at first figure out how to translate its language into scores of unbelievably complicated rules then befuddling the regulated.
One law professor says their obscurity has led to “ad hoc interventions” replacing rule of law. Banks once too big to fail are now bigger. Bailouts could actually be more likely. Politics have not been in hiding.
There are revisions that could fix Dodd-Frank, and a House committee was pushing some, but good luck with Obama as a president. The thing is, he won’t be an Oval Office resident much longer, and Hillary Clinton, who promised to veto any legislation so uppity as to challenge the act, will not replace him. Trump? As part of his overall aspiration to rein in regulation for the economy’s sake, the president-elect said during the campaign he would scale back or flatten the law.
So there’s hope, not just for MetLife, but for Americans generally. Maybe we won’t have a fiscal crisis accidentally forced upon us. Maybe we will prosper.
Jay Ambrose is an op-ed columnist for Tribune News Service. Readers may email him at [email protected].