Thank You, Captain Obvious

TND Guest Contributor: Paul-Martin Foss |

Marketwatch reports today on a study that finds that many of the world’s largest banks are as complex and unwieldy as ever. No s***, Sherlock. We have a regulatory system that raises barriers to entry so that smaller banks can’t compete with the big boys. Every time there’s a financial crisis the response is to heighten those barriers and add more regulations (e.g. Dodd-Frank), which further entrenches the largest players. And the big banks’ response of course is to evade those regulations through the creation of increasingly opaque and arcane financial instruments. It doesn’t hurt, either, that they hire former regulators to help them evade these new regulations.

You would think that after a while, people would realize that government regulation isn’t a panacea, but apparently not. All the regulations in the world won’t do anything towards reducing the size of banks, their complexity, or “Too Big to Fail.” The only real solution is the one that hasn’t been tried and won’t be tried because banks and government are Siamese twins, and that is eliminating all government support and backstops for the banking system. No more bailouts, no more subsidies, no more revolving door between DC and Wall Street. Let banks compete for business on their own merits and allow the banks with the best business models to dominate the market, not those with the best political connections.

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About  Paul-Martin Foss:

Paul-Martin Foss is the founder, President, and Executive Director of the Carl Menger Center for the Study of Money and Banking, an Arlington, VA-based think tank dedicated to educating the American people on the importance of sound money and sound banking.

Prior to founding the Menger Center, Mr. Foss worked in the U.S. House of Representatives for seven years, including six years as Congressman Ron Paul’s legislative assistant for monetary policy and financial services, and one year as Deputy Legislative Director for Congressman Thomas Massie.

As Congressman Paul’s legislative assistant, he assisted the Congressman in his duties as Chairman of the Subcommittee on Domestic Monetary Policy by helping to develop hearing topics, agendas, and briefing Congressmen and their staffs on monetary policy topics. Mr. Foss also was responsible for the management of Dr. Paul’s monetary policy and financial services legislation, including the “Audit the Fed” and “End the Fed” bills, and was co-editor of Ron Paul’s Monetary Policy Anthology, a multi-thousand page compilation of hearing transcripts, lecture transcripts, and other documents related to Dr. Paul’s chairmanship.

Mr. Foss received his Bachelor’s degree from The University of the South (Sewanee), and Master’s degrees from the London School of Economics and Georgetown University’s Edmund A. Walsh School of Foreign Service.

This article appeared on the Carl Menger Center for the Study of Money and Banking and is reprinted with permission, “Creative Commons 4.0.”