Too much regulation cause of current banking, economic mess

    It's accepted as an absolute article of faith among most Americans that the current banking crisis -- and it certainly is not over -- is the result of too few regulations. More regulations, the liberals tell us, we prevent this type of thing from ever happening again.
    Here's a news flash for you: It wasn't too little regulation that has caused this mess, but too much. And more regulation is just going to make the problem worse.
    Now make no mistake, I support breaking up the really big banks. These banks are a threat to our economy. They should be forced to pay substantially more in deposit insurance than smaller banks. This alone will break them up into smaller pieces in pretty short order.
    But the constant pressure on banks to make minority housing loans, regardless of the quality of these loans, is what has led to our current quagmire. The federal government and groups like ACORN were constantly bringing court actions to force banks to increase their number of bad minority loans. And of course any bank wanting to merge had to be able to show a portfolio of risky minority loans or their merger simply wouldn't be approved.
    And then came George Bush and Karl Rove, who wanted to court the Hispanic vote by easing loan requirements to make it easy for minorities, i.e. poor peope, to purchase homes. Lenders were encouraged, and sometimes ordered, to make loans to people with marginal credit, with little or no money down. To facilitate this, Fannie Mae stood ready to guarantee this pile of fecal matter.
    Now it should be noted that the overwhelming majority of these bad loans didn't go to minorities. When the government lowered or eliminated down payments, these programs applied to everyone, not just minorities. The rest is history.
    In hindsight, how in the world did anyone think it was a favor to minorities to encourage banks to make relatively high-interest loans to then that they couldn't repay? How does this help anyone?
    With this as a backdrop, it is a bit more understandable why many of the banks feel they are entitled to a "bailout." They did what the government forced them to do and then everything turned to crap.
    What's important to understand is that the only banking regulation we need is to try to force big banks to get smaller, so no bank will be too big to fail. Aside from that, banks need fewer regulations, not more.
    Unfortunately, we're still going in the other direction. In June of this year the Obama administration forced a St. Louis bank to open a branch in a slum in order to make loans to people who don't have the income to repay them.
    As long as banks are being forced to make bone-headed decisions like that, it's a sign that we have too much banking regulation, not too little.