Yesterday we mentioned in our Random Musing article the negative impact Dodd-Frank legislation was having on the economy.
Today the Financial Times, Dodd-Frank rules blamed for curbing growth, sheds more light on something many of us knew from the beginning. This is bad legislation loaded with, as usually, consequences not contemplated.
Once again these geniuses punish the many to try to apprehend the few.
"Low-income consumers and medium to small businesses that do not have alternatives to bank loans have been particularly hurt," the Times reports.
Quoting a study by Goldman Sachs Global Markets, a public policy institute, the Times notes the bill was an attempt to make banks safer after the 2008 financial meltdown. The new rules have imposed greater costs on banks. Those costs are apparently being passed on to guess who.
Proponents of the bill claim all the rules have yet to be implemented and to fairly evaluate its effects we need to wait until all the rules are in place. Now we don't know about you but that sounds vaguely familiar to what the anti-climate change folks are saying. So is there a double standard at work here?
Some including Fed chair Janet Yellen think higher costs are justified to have a safer system. But again it comes down to whose ox gets gored
According to the study, "An employee who earns close to minimum wage now has additionasl interest expenses on his or her debt that is worth about one week's pay compared with the pre-2008 period."
And yesterday's WSJ carried an article about banks looking to grow above $50 billion asset level facing huge new regulations owing to Dodd-Frank. Some apparently are deciding that he growth isn't worth it. Moreover, the cost for Fannie Mae and Freddie Mac on conforming home loans to meet new standard have gone up 14 basis points.
The costs to finance small and medium-sized businesses jumped "175 basis points more than large companies that can tap public markets, compared with pre-crisis periods."
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