July 23, 2013
A Washington Post article reporting on Neil Wolin’s departure from a top Treasury Department job discussed his work on the Dodd-Frank, then noted the controversy around the bill:
“with conservatives saying it is holding back economic growth and liberals complaining it falls short of what’s needed to rein in Wall Street.”
Actually, the liberal position would also be that the bill would slow growth. By allowing Wall Street to continue in its current practices, the government is effectively subsidizing too big to fail banks by tens of billions of dollars a year.
This is money that is effectively being diverted from the productive economy into the hands of the large Wall Street banks. It has the same effect on growth as if the government taxed people this amount to send large checks to the big banks. The fact that the government also did nothing to restrain the speculative practices of large banks, such as Goldman Sachs foray into the aluminum market, also will impede growth by leading to higher prices for consumers and less money for producers.
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