Libertarian Party Executive Director Wes Benedict issued the following statement today, regarding the financial regulation legislation in Congress:
"The Libertarian Party opposes the legislation currently in Congress. Instead of removing harmful regulations that reduce competition, create winners and losers, and stifle the choices of consumers and financial firms, this legislation merely adds to that heap of regulations.
"It is remarkable that so many people have blamed the banking and financial company failures on the 'free market.' The American finance industry is probably the most regulated industry in human history. It doesn't remotely resemble a free market, and that's been true for many decades. It would be much more accurate to blame the failures on government interference.
"The 2008 TARP bailouts were strongly supported by both Republicans and Democrats. Presidential candidates Barack Obama and John McCain both supported them--Senator McCain even 'suspended his campaign' to rush back to Washington and help push through the massive bailouts. On the other hand, Libertarian presidential candidate Bob Barr firmly opposed those bailouts, and the Libertarian Party has continued to express our opposition since then.
"We're seeing the typical cycle of government regulation:
1. Add more regulations.
2. Watch the new regulations create new problems.
3. Blame the free market.
4. Go to step 1.
"The 2008 TARP bailouts were rationalized with the 'too big to fail' phantom -- the notion that if a big company goes bankrupt, then all financial activity will cease, and the world will basically end. It was one more example of government creating a 'fear of catastrophe' to get people to knuckle under to big government payouts.
"Another major problem with protective government regulation is that it gives consumers the false impression that 'everything's OK, the government will make sure you can't be hurt.' That causes consumers to stop doing their homework, and stop keeping an eye on the businesses they depend on. Then, when the government regulators fail in their job (as the SEC has repeatedly, for example), consumers get hurt much worse than they would if they had never been told the government was taking care of them.
"The problem isn't too little regulation, but too much. Banks, insurance companies, and other financial companies must be allowed to operate freely in a free market, and they must be allowed to fail. No other system will work. Heaping more regulations on top of the already enormous financial regulation pile will only lead to new problems."
Mark A. Calabria of the Cato Institute, writing in the New York Post, commented, "Far from protecting the little guy and sticking it to the fat cats, this bill keeps good, old-fashioned political patronage alive and well."
The Libertarian Party's Platform states: "We favor free-market banking, with unrestricted competition among banks and depository institutions of all types."
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