I recently argued that the GOP made a huge mistake in removing cost controls on Medicare. This will make it easier for the medical industrial complex to loot trillions of dollars from the Treasury. Another example of crony capitalism posing as deregulation may be playing out in the financial sector. Here’s Forbes, from an article advocating the removal of Dodd-Frank:

Last year, I included Dodd-Frank in a list of the five costliest financial regulations of the past 20 years. Since 2010, the legislation has undeniably had a negative effect on the banking industry, driving dozens of institutions to ruin and giving borrowers far fewer options. . . .

Support for Dodd-Frank is waning more and more. Both former Federal Reserve chair Alan Greenspan and billionaire investor Warren Buffett have come out strongly against it, with Greenspan saying he’d love to see the 2010 law “disappear.” For his part, Buffett believes that, as a result of the law, the U.S. is less well equipped to handle another financial crisis, as Dodd-Frank stripped the Fed of its ability to act.

Case in point: When now-defunct investment bank Bear Stearns was headed for failure 10 years ago this week, the Fed arranged an emergency loan of nearly $13 billion routed through JPMorgan. It also agreed to purchase $30 billion in Bear assets. But now, because of Dodd-Frank, such assistance is illegal since the law stipulates Fed lending must be broad-based and not directed toward a single institution.

A bit later the article poses this question:

So what lessons can we take away from Bear?

I kept reading, hoping for some recommendations for changes in public policy to avoid a repeat of 2008. After all, surely no one (on either the left or the right) can believe that bailing out big investment banks that have behaved recklessly is a good thing. And yet the article concludes with absolutely no discussion of how public policy could be improved to makes this sort of bailout less likely.

In the end, all we have is a call for “deregulation” (i.e. removal of Dodd-Frank) so that there will be no legal barriers to government bailouts of big investment banks.

Sometimes it seems as though in modern America there are only two choices on offer, statism and crony capitalism. There is no political party advocating actual free market capitalism.

PS. Just to be clear, I’d love to see Dodd-Frank completely abolished, if combined with a policy of removing government protections from the financial system. But as long as we have the GSEs, FDIC, TBTF, FHA, etc., then “deregulation” is often just a cover for crony capitalism.