Cliches come to mind, like….setting the fox over guard of the hen house, or….giving robbers the keys to the bank.

But that’s a digression….

The Frank-Dodd banking regulation bill presented in the early dawn hours at the start of last weekend was “hailed” by President Obama in an otherwise bad news week. No surprise there.

As the WSJ makes note, there’s great irony in the whole thing.

Chris Dodd and Barney Frank, those Fannie Mae cheerleaders, played the largest role in writing the bill. Congressman Paul Kanjorski even offered a motion to memorialize it as the Dodd-Frank Act. It’s as if Tony Hayward of BP were allowed to write new rules on deep water drilling.

The Federal Reserve, which promoted the housing mania and failed utterly in its core mission of monitoring Citigroup, will now have more power to regulate more financial institutions and more ability to dictate the allocation of credit.

The opinion piece says, unjokingly, ”willy-nilly will now be the law.”

And the SEC, which created the credit-ratings oligopoly and missed Bernie Madoff, will get new powers to decide how easy it should be for union pension funds to get their candidates on corporate proxy ballots.

Oh, and Fannie Mae and Freddie Mac? They aren’t touched at all, even as they continue to lose billions of taxpayer dollars each quarter.

In other words, our Washington rulers have taken 2,000 or so pages to double and triple down on the old system that failed.

I’ve said here before that I’ve long had an aversion to business and finance stories. But for some reason, the economic crisis that gripped the globe commanded my attention and I tried to get my head around the reporting in the business journals (and even the language they used) to understand how it could have happened and what it all means. What didn’t get a lot of play in the media was the role certain members of Congress played in the sub-prime mortgage fiasco that led to the meltdown. Members who wound up in prominent positions after the last election and took the opportunity from that loft to blame others. Members who now wind up in this new position of regulating the banking industry.

Perhaps the most striking irony is that even in 2,000 pages Congress isn’t precisely defining new bank powers. That task will be left to the regulators in the coming weeks and months, a reality that some in the media are finally figuring out. They are now reporting, with notable alarm, that this means bank lobbyists will be able to influence those rules behind the scenes.

You don’t have to be a business or economics or policy wonk to get this. Just…a citizen paying attention.

…Congress also added a last-minute, dead-of-night $19 billion tax on some financial institutions to pay for the implementation of these vast new regulatory powers. Who will pay this tax? Whoever the council of regulators decides should pay…This will take $19 billion out of financial firms that supply capital to growing companies, and it will punish precisely the firms that have attracted the most capital because of their better-than-average performance. This is only one of many new ways that Dodd-Frank will reduce the supply and raise the cost of credit across the economy…

We could go on, but perhaps the best summary is to hail Dodd-Frank as the crowning achievement of the Obama “reform” method. In the name of responding to a crisis, the bill greatly increases the power of politicians and regulators without addressing the real causes of that crisis.

Or the role of those same politicians and regulators in causing it. Key point.

It makes credit more expensive and punishes business without reducing the chances of a future panic or bailouts.

The only certain result is that when the next mania and panic arrive, and they will, Congress and the regulators will claim they were all someone else’s fault.

As they have all along.

However, in other news…..some members of Congress are starting to take a sober look at this bill. Such exercise of discretion and prudence in the halls of Congress is, indeed, a bit more surprising. But then, they have political fortunes to guard.

Sheila Liaugminas

Sheila Liaugminas is an Emmy award-winning Chicago-based journalist in print and broadcast media. Her writing and broadcasting covers matters of faith, culture, politics and the media....