From Dodd-Frank: Wrong, Wrong, Wrong by Contrad Black in the National Review online version 8/11/11
The two most offensive aspects of Dodd-Frank are that it is part of the concerted bipartisan effort of the entire political class to pretend that the economic crisis was entirely the result of private-sector greed, and that it doesn’t address at all the main discernible causes of the economic crisis of 2008, which have not gone away. The housing bubble and imprudent lending into it were the principal problem, and the principal culprit is the United States government, for legislating a substantial percentage of private-sector commercial mortgages to be on a non-commercial basis; for issuing executive orders to the giant, pseudo-private-sector Fannie Mae and Freddie Mac to make the majority of their mortgage loans on that basis; and for keeping interest rates and mortgage equity requirements so low for so long. This was certain to lead to mountains of excess residential housing and worthless mortgages.
It was also the federal government that extended the permissible borrowing ratio of debt to equity for merchant banks to 30 to one, and required constant mark-to-market current valuation of the assets against which they were borrowing up to 30 times. A moron could see that if a bank became impetuous and put too many eggs in one basket, and the market value of the eggs declined, it would have to issue securities to hold its ratio, at steadily declining prices, encouraging and rewarding short sales and assuring a power-dive into insolvency, as was allowed to happen to Lehman Brothers.
Trying to regulate what cannot be regulated and curtailing the economic freedom of people to trade, even if they lose their shirts doing it, is not the answer. When you gamble, you must be prepared to lose, and the federal government should set its own house in order. Dodd and Frank had no authority to shape up the federal deficit, but they did have a mandate at least to opine on the $5 trillion de facto bankruptcy of Fannie and Freddie, and didn’t do it.
The same who can see no fault in the government and the bipartisan ruling class in the creation of the problem are unable to see any solution but the heavy hand of government to solve it. As any doctor can tell you, an improper diagnosis can kill a patient as surely as an improper treatment. In fact most bad solutions originate with a poor understanding of the problem. We seek a government to protect us from the excesses and gyrations of capitalism but are unable to a understand that we must also be protected from the often well intentioned but misguided hand of government. That was the purpose of the constitution.