Home
/
RELIGION & LIBERTY ONLINE
/
Dodd-Frank: Regulation Cannot Build Character
Dodd-Frank: Regulation Cannot Build Character
Mar 25, 2026 11:42 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
‘For God and Profit’ Review: Christianity is pro-profit and pro-property
Benedikt Koehler, writing for Reaction, recently reviewed Samuel Gregg’s latest, For God and Profit. Koehler is an author whose books and articles focus on the history of economic thought. He starts the review by offering some background on why Gregg’s book is so important, citing events like the financial crisis of 2008 and some of Pope Francis’ critiques of capitalism. Then Koehler begins to dig into some of the details of Gregg’s book: The es in two halves. The first...
Why is Russia restricting religious freedom?
Two months ago Russian president Vladimir Putin signed into law a number of “anti-terrorism” measures that limit missionary and evangelistic efforts and restrict the religious freedoms on non-Orthodox groups. As Christianity Today notes, to share their faith, citizens must now secure a government permit through a registered religious organization, and they cannot evangelize anywhere besides churches and other religious sites. The restrictions even apply to activity in private residences and online. Why is Russian taking implementing such constraints on believers?...
Religious healthcare workers have a professional obligation to follow their conscience
For centuries, doctors subscribed to the Hippocratic Oath, a vow that includes admonitions against abortion, assisted suicide, and euthanasia. This oath formed the core of Western medical ethics and provided a boundary marker for a physician’s conscience by outlining an ethic of neighbor love (Cf Rom 13:8-10). But for decades the Hippocratic ideal and the Christians concept of neighbor love have been eroded in the medical field by unethical bioethicists. So it’s not surprising that we now find some bioethicists...
‘He needs us’: The missing ingredient in Western missions
More and more, Western churches are opening their eyesto the risks and temptations inherent in so-called “short-term missions,” whether manifested inour basic vocabulary, paternalistic attitudes, or reactionary service. As films like Poverty, Inc. and the PovertyCure seriesdemonstrate, ourcultural priorities and preferred solutions often distract us from the true identities and creative capacities of our neighbors. Paired with apassion to “do good,” and standing atop an abundance of resources, it’s easy toforget and neglect the importance of real relationship, holistic service,...
7 Figures: Income and poverty in the U.S.
Yesterday the U.S. Census Bureau released itslatest report on e and poverty in the United States. Here are seven figures from the report you should know about: 1. Real median household e increased 5.2 percent between 2014 and 2015—from $53,700 to $56,500. (This is the first annual increase in median household e since 2007.) 2. In 2015 the median e of a married-couple household was $84,626. For a female head of household (no husband present) the median e was $37,797....
Radio Free Acton: Jordan Ballor on Why Abraham Kuyper Matters
On this edition of Radio Free Acton, we speak with Jordan Ballor, a general editor of the Abraham Kuyper Collected Works in Public Theology, a major series of new translations of Abraham Kuyper’s key works. We discuss the genesis and scope of the project, and examine what Kuyper has to say to modern Christians and why his contributions remain relevant a century after their initial publication. You can listen to the podcast via the audio player below. ...
Samuel Gregg on the Regensburg Address, Ratzinger, and reason
In a new article for Public Discourse, Samuel Gregg, the Director of Research at Acton, talks about the “Regensburg Address” and what it means 10 years later. Benedict XVI’s speech at the University of Regensburg on September 12, 2006 “managed to identifytheinner pathology that is corroding much of the world, how this malignancy emerged, and what can be done to address it.” According to Gregg, this speech “showed how a collapse of faith in full-bodied conceptions of reason explains so...
The soul of the polis
In this week’s Acton Commentary, “Piety and Politics: The Church’s Social Responsibility,” I take up the Kuyperian distinction between the church conceived as organism and as institute and point out some ways in which such ideas can help us navigate the dangerous waters of social and political engagement. When the Letter to Diognetus describes the diffuse influence of Christians in the world, it uses the living imagery of the soul: What the soul is in the body, that Christians are...
Hunger in America is on the decline
In policy and social science hunger is defined as a condition in which a person, for a sustained period, is unable to eat sufficient food to meet basic nutritional needs. While the vast majority of people who suffer from hunger live in developing countries, far too many people in America also suffer from hunger. Determining how many are affected, though, is made more difficult because we do not have an exact way to identify who lacks food. mon proxy is...
What Christians should know about (basic) economics
Note: This is the first post in a weekly video series on basic microeconomics. For the past two years I’ve been rolling out a series of posts thatattempt to define and explain a range of economic terms from a Christian context. The goalof the series is to provide Christians with a basic level of understanding that will help us thinkmore clearly about how to apply mitments to economics and public policy. But for Christians to understand how faith applies to...
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved