Former Federal Reserve Chairman Alan Greenspan believes the Dodd-Frank Act is not robust enough to handle the intricacies of the massive, modern financial system and that its implementation could cause major problems, according to his piece in the FT.Greenspan cites several examples of the new regulations failings:
- Ford had to stop an asset backed security auction because it couldn’t get a credit rating; The SEC eventually intervened.
- Debit card fees may stop banks from issuing them at all
- U.S. at a competitive disadvantage vis-a-vis Asia and Europe on prop trading
- Bank pay regulation unlikely to work
He compares the new laws to wage and price controls implemented in the 1970s, suggesting it could create a similar “market distortion.”