Bank Deregulation Myth

November 29, 2012 by irbi2076

Advocates of big government have built economic policy on a series of myths. One is that the ‘robber barons’ took advantage of the common man to create their fortunes. In fact, great industrialists, like John D. Rockefeller, dramatically improved the quality of life for everyone. Another myth is that President Roosevelt’s New Deal ended the Great Depression, when in fact the Depression did not end until after WWII when his policies were abandoned.

The new myth is that the recent financial crisis and failed recovery were caused by banking deregulation and greed on Wall Street. In truth, the banking industry was never deregulated. There was a massive increase in regulation under President Bush, including the Privacy Act, the Patriot Act and Sarbanes- Oxley. The banking industry was misregulated, not deregulated. These new laws fundamentally misdirected banking risk management. There has always been plenty of greed (and fear) on Wall Street. However, there is not one shred of evidence there was a greed plague that swept finance.

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