[Peter Wallison is the Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute. His book on the financial crisis, “Hidden In Plain Sight: How the U.S. Government’s Housing Policies Caused the Financial Crisis and Why It Can Happen Again”, was published today by Encounter Books. The following article by Peter was written for RealClearMarkets.]
From the time it was first proposed by the Obama administration early in 2009, the legislation that eventually became the Dodd-Frank Act was opposed by Republicans in Congress. It got no Republican votes when it passed the House and only two Republican votes when it passed the necessary procedural vote in the Senate.
The reason for this nearly unanimous Republican opposition is simple: the key provisions of the act bore little relationship to the actual causes of the crisis. Indeed, the record shows that in designing and adopting the act neither the Obama administration nor the Democratic Congress made any effort to understand why there was a financial crisis in 2008 or the role of the government’s housing policies in bringing it about.Posted: Jan 17, 2015