Peter J. Wallison On Dodd's Financial Regulatory "Reform" BIll

I don't typically find Peter Wallison's Wall Street Journal editorials to be particularly sensible or well reasoned.

Yesterday's, however, critiquing Chris Dodd's financial regulatory "reform" bill, was an exception. Wallison correctly excoriates Dodd for creating unworkable new entities (FSOC), giving the failed Fed more control over the financial system, and providing alternatives to bankruptcy which will reward overly-large banks with lower-cost borrowed funds.

As Wallison points out, those institutions judged "too big to fail" will attract plenty of lower-cost funds from bond investors, because they will correctly expect to be repaid, in full, by the federal government, should the institution fail.

Finally, Wallison notes the idiocy of Congress rushing to write and pass a regulatory "reform" bill before receiving a report from its own Financial Crisis Inquiry Commission, due in mid-December of this year.

It's hard to believe our Congress, and, in particular, retiring Senator Dodd, could deliberately be this obtuse and stupid. But there's no denying the content of Dodd's bill, and the likelihood that it will, if passed, be the source and cause of even more large-scale financial sector disasters to come.

Only, this time, everyone will know in advance who will win- bondholders- and who will lose- taxpayers.