Financial Reform with False Remedies and Errors of Omission

A common criticism of the Dodd-Frank bill keeps coming up as more people wade through the several hundred sections, or at least summaries of them. This common criticism is that the bill contains many false remedies and errors of omission. The criticism comes from both the left and the right. See, for example, these two pieces: "The Failure of Financial Reform, Itemized" by John Talbott in the Huffington Post and "Phony Financial Reform" by Thomas Donlan in Barron's. While political factors—special interest lobbying, social activist pressures, covering up past mistakes—were probably behind much of the bill, economic analysis shows that the problem is that it is based on a misdiagnosis of the financial crisis, as I wrote in this op-ed which appeared in the July 1 Wall Street Journal.

The bill will be taken up by the Senate later in the month, but is it too much to ask that they wait until the Financial Crisis Inquiry Commission finishes its diagnosis in December? If you want to find out more about the bill, you can download all 2300+ pages, but beware that it is 74 megabytes.