Home
/
RELIGION & LIBERTY ONLINE
/
Dodd-Frank: Regulation Cannot Build Character
Dodd-Frank: Regulation Cannot Build Character
Feb 15, 2026 8:09 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
Jimmy Lai Gets 5 Years for Fraud as He Awaits Trial
Hong Kong’s freedom fighter takes another brutal hit from Beijing. Read More… Held in solitary confinement, 75-year-old Jimmy Lai is still awaiting trial for the crime of resisting the iron grip of the Chinese Communist Party in Hong Kong. On December 10, however, that grip got a little tighter. A Hong Kong court sentenced Lai to an additional five years and nine months on two counts of fraud, related to a leasing issue with his pro-democracy newspaper, Apple Daily. According...
Sinners, Saints, and Grace in We’re No Angels
In its two film versions, a story about escaped convicts fleeing justice shows that whether you’re naughty or nice, there’s always hope for redemption. Although, at a price. Read More… Michael Curtiz, famed director of Casablanca, made a Christmas movie in 1955, starring Humphrey Bogart, called We’re No Angels, about the power of innocence and moral decency to transform even hardened criminals—of whom Bogart is one, the other two played by the famous British actor-director Peter Ustinov and the American...
Scorsese’s Hugo Is a Family Film Worth Revisiting
The director of Taxi Driver, Raging Bull, and Goodfellas delivered a delightful holiday treat that captures the magic of cinema and how one mechanism—the motion picture camera—can free us from the constraints of the purely mechanistic. Read More… Martin Scorsese turned 80 last month and he deserves celebration. He’s one of perhaps five directors in Hollywood who is respected as a master of the cinematic art, and the one most closely identified with the art itself. Perhaps this is because...
Art as Spiritual Journey
A new book shows how the greatest works of art were more than just opportunities to feel something but pilgrimages to the divine. Read More… In his essay “The Philosophy of Medieval Art,” Bishop Fulton Sheen opens with the statement, “There is no such thing as understanding the art in any period apart from the philosophy of that period.” In other words, far from being a frivolous elective course for aimless liberal arts majors, Sheen explains that the discipline of...
C.S. Lewis: How ‘Medieval’ Was He?
An important new addition to Lewis studies explores the influence of the medievals on Lewis the writer. But Lewis the thinker was just as importantly an anti-modernist modern. Read More… When es to evaluating C.S. Lewis’ engagement with medieval authors, Jason Baxter performs the heavy lifting with ease, almost with wings. The Medieval Mind of C. S. Lewis: How Great Books Shaped a Great prises, in effect, a sequence of primers on major and minor figures—Boethius, Pseudo-Dionysius, Calcidius, Dante, Nicholas...
Spielberg’s The Fabelmans Captures the Magic and Mystery of Moviegoing
The director of such blockbusters as Jaws and E.T. and the Oscar-winning Schindler’s List and Saving Private Ryan delivers a thinly veiled autobiographical account of how he came to be a believer in our secular religion. Read More… Modern society has no shortage of candidates for substitute religions. Instead of attending religious services, we can assemble at football games; in lieu of studying the lives of the saints, we e to know Harry and Meghan. And, for much of the...
Jimmy Lai Trial Adjourned Until September 2023
Lai remains in prison as Hong Kong awaits word regarding Lai’s international legal counsel. Read More… Entrepreneur and freedom fighter Jimmy Lai’s fight for justice will now drag on for nine more months as the Hong Kong High Court adjourns his trial. The es as Hong Kong waits for Beijing to rule on allowing King’s Counsel Tim Owen, a British lawyer and internationalist specialist, to join Lai’s defense team in his fight against the country’s draconian National Security Law. The...
Withdrawing from Afghanistan: One Veteran’s Crisis of Command
Lt. Col. Stuart Scheller’s now infamous video calling civilian and military leaders to account for the Afghanistan-withdrawal debacle cost him his career. Was it worth it? Read More… On August 26, 2021, Stuart Scheller posted a video on LinkedIn and Facebook in which he strongly criticized senior U.S. military and civilian leaders for the embarrassing way in which the country had withdrawn forces from Afghanistan in the preceding days. The video was shared more than 40,000 times and “liked” over...
The Myths of American Individualism
Whence the rugged individualism that is traditionally synonymous with being American? Was it there from the beginning, rooted in our founding documents? Or does the idea represent a later corruption that can be reversed in pursuit of a more religious or egalitarian republic? Read More… Americans are an individualistic bunch. Our popular culture makes heroes of outsiders, loners, and disrupters. Our politicians emphasize their independence of entrenched institutions, party discipline, and special interests. In economic affairs, we assume that success...
King Jesus and Political Discipleship
A new book asks us to consider what exactly the Gospel calls us to be and to do as citizens in a fractious, contentious, confusing time. Spoiler alert: It looks a lot like the cross. Read More… Our current political reshuffling has been dizzying, perhaps even more in the munity than among Americans in general. The conservative shift toward populism under Trump empowered both a push for real nationalism—blood, soil, industrial policy—as well as even more fringe movements such as...
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved