Bill Clark: Do you realize what you've done? You are asking for the largest bailout in the history of this country. We are talking about nationalization. Socialism. I've fought against this my entire life!
Bretton James: And if we don't get it, Bill, then there is no history anymore. The music stops. The ballgame is over. Julie?
Julie Steinhardt: 1929...It's worse now because it goes faster. Money markets worldwide dry up before the end of the week. ATMs stop spitting out cash. Banks close. It'll be the end of the world, Bill.
--Wall Street: Money Never Sleeps
Last week President Trump ordered a review of rules and regs governing financial markets to ensure alignment with several 'core principles,' including empowering Americans to make independent financial decisions and informed choices, and preventing tax-payer funded bailouts.
Many are viewing this executive order as a referendum on the validity of the Dodd Frank Act signed into law during President Obama's first term. It is easy to understand why.
One only needs to start paging thru the legislation to get a sense of its bureaucratic heft. At over 2300 pages, DF is a marvel of central planning unmatched by any piece of legislature in recent memory save for Obamacare (which lawmakers have still yet to read in order to find out what's in it).
A popular defense of DF is that it has served to reduce risk by exerting more control over the banks to keep those institutions from blowing up the financial as they almost did in 2008. However, DF does little to address the root causes of the credit crisis. In fact, it can be argued that the legislation has elevated the risk of future meltdowns by adding to the moral hazard that runs rife in the system.
Any actions from this order that hand control back to the markets will be welcome.