Writing at the New Republic Alex Shephard bemoans Democrats’ reaction to the banking reform bill working its way through Congress:
The 17 Democrats who voted for the bill to proceed on Tuesday are either centrists or facing reelection in states that Donald Trump won in 2016. They have defended the bill on the merits, arguing that it will free up credit in rural areas and that it’s an overdue fix for Dodd-Frank’s flaws. There is also a sense among Democrats that this may very well be the best deal they can get on Dodd-Frank reform. But it’s also clear that they’re supporting the bill for performative reasons, hoping to show voters back home that Congress can do more than just bicker and that Democrats are willing to work with Republicans to get things done. “This is old-school legislating,” North Dakota Democrat Heidi Heitkamp told Politico.
But it’s not old-school legislating, not really. If it were, Democrats would participate in a give-and-take with Republicans. There would be parts of the bill that they could point to as significant Democratic wins. But as it stands, the bill is a giveaway to the banking industry in which consumers get very little. Even though it may be easier for some consumers to get loans, that comes with the tradeoff of a weakened financial regulatory system and fewer consumer protections.
Nothing in the bill bears any resemblance to my idea of the sort of reform that’s needed. If I were king I’d split up the big banks (including the investment banks), ban branch banking, and prohibit state-owned banks from doing business in the United States. But that’s just me.
I don’t think that fractional reserve lending is necessarily a problem. Size is the enemy not fractional reserve banking.