Happy Birthday, Dodd-Frank

In the absence of smarter bankers, regulation will have to do.

By Bethany McLean
Posted Friday, July 22, 2011, at 11:21 AM ET

Poor Dodd-Frank. How would you like to celebrate your first birthday like this? A year after the financial reform legislation was signed into law, Republicans are inveighing against it, introducing bills to abolish or weaken it, and trying to starve the regulators that are supposed to implement it. Wall Street is pouring money into lobbying against it. Liberals worry that Dodd-Frank is already dead, and while that might be overstating the facts, the argument that too much regulation might stifle the weak recovery is gaining ground.

Right now, the only thing you can be sure of about Dodd-Frank is that it will have unintended consequences. But the status quo was not an option. The subprime crisis laid bare some ugly truths about the banks and showed that some of our fundamental assumptions about the way the world worked were wrong.