The Administration and Congressional Democrats demonized health insurers to help pass their healthcare reform agenda.  They then demonized Wall Street to help pass their financial reform agenda.  These “whipping boy” strategies had a common goal:  substantial expansion of federal government control over the private sector.

The Dodd-Frank financial reform bill vastly expands federal power over financial institutions and beyond, leaving most of the substantive details to be worked out by administrative agencies. The byzantine bill evades most of the underlying causes of the financial crisis.  Its creation of a vast new federal consumer protection agency bears little relation to those causes.   It’s a bad bill at a bad time for the economy.  It will hinder rather than enhance economic growth.  It will hurt Main Street without preventing future crises. Unintended consequences will abound.

The bill’s namesakes procrastinated while Fannie Mae, Freddie Mac, and the housing bubble grew rapidly.  Their bill does not touch Fannie or Freddie.  But it rewards the Federal Reserve with significantly expanded regulatory power, despite the Fed’s monetary and regulatory failures that played significant roles in creating the housing bubble.