Home
/
RELIGION & LIBERTY ONLINE
/
Dodd-Frank: Regulation Cannot Build Character
Dodd-Frank: Regulation Cannot Build Character
Feb 24, 2026 11:03 PM

Dodd-Frank regulations, originally scheduled to take effect on July 16, are intended to create market stability. Instead, they are doing just the opposite.

Regulations aimed at financial derivatives, incorporated into the Dodd-Frank Wall Street Reform and Consumer Protection Act that was signed into law last July, have recently been rescheduled to take effect on December 31. The regulations are aimed at reducing the risk of derivatives, a contentious issue among those debating the root cause of the financial crisis. A Reuters’ report suggests this legislation will create uncertainty and a legal void for the derivatives market. Fears that trades could be challenged or invalidated may send the market for swaps (over-the-counter derivatives) into “legal limbo,” according to NASDAQ News.

Scott O’Malia, missioner of the Commodity Futures Trading Commission, told Reuters,

I have concerns that this proposal will not provide the appropriate level of legal certainty, and if it is to last only a few months, will likely only serve to further confuse and frustrate the markets and market participants.

Legal delays and uncertainties are only a small part of a much larger problem. Saturated with 2,253 pages of confusing regulation, Dodd-Frank is considered to be the most drastic financial revision in 80 years.

Former U.S. Senator Judd Gregg, now an adviser to Goldman Sachs, says Dodd-Frank goes too far for our good. He argues the regulation will hurt job creation and smother economic growth:

The consequences will be a massive transfer of economic activity overseas and an equally massive contraction in the liquidity and credit that keeps U.S. petitive and vibrant.

Though intended to stabilize the financial market, Dodd-Frank is creating more uncertainty and instability at our liberty’s expense. Regulation will petition and stifle individual freedom. In an attempt to correct the immoral behavior on Wall Street, the government promising the dignity of the individual by reducing financial choices.

In mentary titled “Credit Crunch, Character Crisis,” Samuel Gregg, the Director of Research at the Acton Institute, discusses the financial and moral costs of similar risk-controlling regulation in the past:

A longer-term problem is that this failure may facilitate calls for more financial regulation, much as the Sarbanes-Oxley Act was a response to America’s 2000-2001 corporate scandals. The evidence is growing that Sarbanes-Oxley has proved extremely costly for business. Even Sarbanes-Oxley’s authors now concede many of its provisions were badly drafted.

According to a University of Pittsburgh study, Sarbanes-Oxley’s discouragement of prudent risk-taking and its generation of pliance-costs have contributed to many firms listing themselves in the City of London rather than Wall Street. This has also been facilitated by Britain’s Financial Services Authority’s shift away from Sarbanes-Oxley-like procedural approaches to financial regulation, towards principles-based regulation which focuses on (a) the behavior reasonably expected from financial practitioners and (b) good es.

In the end, however, no amount of regulation — heavy or light — can substitute for the type of character-formation that is supposed to occur in families, schools, churches, and synagogues.

These are the institutions (rather than ethics-auditors and business-ethics courses) which The Wealth of Nations’ author, Adam Smith, identified as primarily responsible for helping people develop what he called the “moral sense” that causes us to know instinctively when particular courses of action are imprudent or simply wrong — regardless of whether we are Wall St bankers or humble actuaries working at securities-rating agencies.

Perhaps the recent financial turmoil will remind us that sound financial sectors rely more than we think upon sound moral cultures.

Gregg’s economic and moral analysis suggests regulation cannot build character. The implicit goal of Dodd-Frank is to achieve moral ends on Wall Street through coercive means — expanding government oversight. We must remember virtue cannot be artificially manufactured by increased regulation; rather virtue requires freedom to choose the proper course of action. Moral character in the business world should be encouraged by a proper incentive structure, but even more importantly by the values taught in our social institutions.

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Beyond consumer Christianity: Equipping the church for cultural transformation
Modern evangelicalism’s recent fondness for “church shopping” (or “church hopping”) has led to plenty of perpetual daydreams about the “perfect church” that checks the right boxes fortability and convenience. In turn, many are falling prey to consumeristic tendencies and attitudes that influence their thought and action well beyond Sunday mornings. Indeed, the deleterious impacts of Spectator Christianity are not just confined to the pews of the church or avenues of “formal” or “full-time” ministry. They disable and disempower the church...
Radio Free Acton: Matt Kibbe on political cronyism; Upstream on Thank You for Your Service
On this episode of Radio Free Acton, Dylan Pahman, Managing Editor of the Journal of Markets & Morality at the Acton Institute, speaks with Matt Kibbe, President and Director of Free the People, about political cronyism. Dive deeper into the topic of political cronyism and register now to hear Matt Kibbe forActon on Tap on November 16 at New Holland Brewing in Grand Rapids, MI. Then, on the Upstream segment, Bruce Edward Walker discusses the movie “Thank You for Your...
What does the Bible say about wealth creation?
What does the Bible say about wealth creation? Can wealth creation lead to Biblical human flourishing? Earlier this year two evangelical groups, theLausanne MovementandBAM Global, released apaper exploringbiblical perspectives on the theme of ‘wealth creation for holistic transformation’ to address these questions and more. The paper begins by considering the meaning of the terms ‘wealth’ and ‘holistic transformation.’ First, they discuss the concept of wealth: Biblically speaking, wealth is a concept embodying strength, power, riches, and substance. Sometimes ‘riches’ and...
5 Facts about veterans
Today is Veterans Day, a U.S. public holiday set aside to thank and honor all those who served honorably in the armed forces both in wartime or peacetime. Here are five facts you should know about veterans in the United States: 1. The Veteran’s Administration estimates there are currently 19,998,799 living veterans (18,115,951 men and 1,882,848 women). Out of that number, 8,876,728 served in the Army, 4,264,809 served in the Navy, 3,476,021 served in the Air Force, 2,213,601 served in...
5 facts about the Russian Revolution
This week is the hundredth anniversary of the second Russian Revolution, one of the most transformative political events in the history of the modern world. Here are five facts you should know about the world’s most destructive revolution: 1. The second Russian Revolution (the Bolshevik Revolution) began on November 6 and 7, 1917. (Because the Russians were still using the Julian calendar, the date for them was October 24 and 25, which is why the event is often referred to...
Rev. Sirico and R.R. Reno debate the merits of free markets
Should Christians rethink the merits of free markets? Last night The King’s College hosted a debate on that question between First Things editor R.R. Reno and Acton Institute president and co-founder Rev. Robert Sirico. In his opening statement, Reno admits that free markets have done a great deal to promote human flourishing, but says that “markets are human, and like all things human in our fallen world, markets can also impede human flourishing.” Reno claims this is especially true today...
The Paradise Papers: A moral assessment of tax havens from Richard Teather
To hear politicians across the Atlantic tell it, the dark specter of Paradise is haunting the world. The Paradise Papers reveal precisely how wealthy individuals and corporations – including the Queen of England, U2’ssainted front man Bono, the less-than-saintly Madonna, and scores of others – have used offshore tax havens to limit their tax liability. The papers, which were illegally obtained from Appleby law firm and released by the International Consortium of Investigative Journalists, include 13.4 million files dating from...
The Russian Revolution’s rebellion against spirit and man
As we reflect on the impact of the Russian Revolution on its 100th anniversary, we’re bound to hear routine admiration of its goals and ideals, even among those who duly recognize the violence and oppression that followed. It’s mon refrain, whether made by college professors or garden-variety Bernie Sanders activists: Socialism has not been tried and found wanting; it has been found difficult and not tried. Indeed, even those who oppose such a system are plicit in this sort of...
Today: Debate between R. R. Reno and Rev. Sirico on free markets
Conservative Christians are ing increasingly enticed by the idea of socialism. As many people with good intentions are beginning to consider socialism as a beneficial alternative to capitalism, supporters of the free market would beg to differ. Recently the editor of “First Things”, Rusty Reno, voiced his concerns with capitalism in his essay on Michael Novak’s The Spirit of Democratic Capitalism. Reno criticizes Novak’s view of capitalism and proposes a reexamination of socialism. President and co-founder of the Acton Institute,...
Edmund Burke’s conservative case for free markets
“Conservatives who believe that free markets are the most optimal of imperfect economic systems thus need to rethink about how to integrate their case for markets into the broader conservative agenda,” says Samuel Gregg in this week’s Acton Commentary. “And here, I’d argue, the man whose thought gave birth to modern conservatism has much to teach us.” Though widely considered modern conservatism’s intellectual progenitor, Edmund Burke’s economic views generally receive sparse attention. Burke’s conservatism is mainly linked to his religious...
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved