Time to end ‘Government-by-Crisis’

So how exactly did this massive bill come to be law? Robert Kaiser, a 50-year veteran of the Washington Post, has the answer in his new book: An Act of Congress. The problem, he says, is Washington.
 
Although some have viewed Kaiser’s reporting as congratulating Washington for “doing something,” in fact, Kaiser's good reporting paints a picture of the Dodd-Frank legislation as a prime example of what happens when you mix an economic crisis with political ambition and lobby power: bad policy. The mixture of what he describes as “politics-obsessed mediocrities who know little about the policy they're purportedly crafting and voting on,” and outcry for action in Washington following the subprime mortgage crisis, created the perfect storm for Dodd-Frank to blossom; an immaculate “policy window” ripe for Congress to seize upon.
 
Kaiser is also not the first in his field to insinuate such a notion. In 2010, the same year Dodd-Frank was enacted, Professor Stephen Bainbridge (UCLA School of Law), suggested a similar hypothesis. In his research he compared Dodd-Frank to the Sarbanes Oxley Act of 2002, which was quickly enacted following the burst of the IT crisis in 1997.

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Bainbridge defines both Dodd-Frank and Sarbanes Oxley as “Bubble Acts,” characterized by the following attributes: (1) enacted in response to a major negative economic event; (2) enacted in a crisis environment; (3) a response to a populist backlash against corporations and/or markets; (4) adopted at the federal rather than state level; (5) transfers power from the states to the federal government; (6) interest groups that are strong at the federal level but weak at the Delaware [corporation mecca] level support it; (7) typically, not a novel proposal, but rather a longstanding agenda item of some powerful interest group; (8) and the empirical evidence cited in support of the proposal is, at best, mixed and often shows the proposal to be unwise.
 
The academic work of Stephen Bainbridge and the compelling new book by Robert Kaiser make an unwittingly strong case for the repeal of Dodd-Frank and a drastic change in Washington’s legislative process away from “not letting a crises go to waste,” and moving toward the deliberative process of what used to be known as “regular order.” Voters, consumers, and the millions of Americans seeking jobs should demand that Washington scrap the massive Dodd-Frank regulatory scheme before it does any more damage to the recovery, and instead focus on the real problems facing the American economy.

Sayegh is an executive VP of Jamestown Associates, a Fox News contributor and a Washington correspondent for Talk Radio News Service.

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