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When Bankers Behave Badly

Mitt Romney should call them on it.

Jul 23, 2012, Vol. 17, No. 42 • By IRWIN M. STELZER
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For big business, a new regulation means hiring a few more lawyers; for small businesses, it means trying to hurdle still another barrier to entry. Take the case of Barclays, the leading Libor rate-fixer (so far as we know). Britain’s bank regulator complains that Barclays always leads the charge for more regulation: “Barclays has a tendency continually to seek advantage from complex structures or favorable regulatory interpretations.” Pharmaceutical companies promised support for Obamacare in return for provisions that protect them from competition from reimported drugs and generics. Insurance companies accepted costly provisions of Obamacare in return for regulations that allow them to roll those costs into the expenses they will be permitted to recoup in rates and, more important, penalties (oops, sorry Chief, taxes) that deliver to them millions of unwilling, healthy new customers. Big banks are allowed to shelter under Fed regulations when the going gets tough in return for muting their opposition to regulations that will do more to hurt their small competitors than prevent them from going about their business in the good, old fashioned way. Campaign contributors are allowed to short-circuit capital markets and obtain subsidies for their uneconomic green enterprises, sopping up capital that markets would surely allocate to more promising ventures.

What Obama has on offer is not the entrepreneur-driven market capitalism that conservatives have always favored. What Obama offers is a crony capitalism that Mitt Romney is particularly well suited to attack, using his knowledge of how capitalism should work. And what Mitt Romney can offer is a conservative willing to make the tough, and dare I say it, fair and radical decisions that will get capitalism performing as it once did: creating huge amounts of material wealth, and distributing it not to presidential cronies, or the companies with the biggest lobbying budgets, but to those who create wealth with their capital, risk-taking, and hard labor. That’s the “right track” that two-thirds of Americans believe the current engineer-in-chief has veered off.

Irwin M. Stelzer is a contributing editor to The Weekly Standard, director of -economic policy studies at the Hudson Institute, and a columnist for the Sunday Times (London).

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