The landmark Dodd-Frank Act transformed the U.S. banking industry into a public utility, increasingly dominated by financial Gargantuas presumed too big to fail. The act and the presumption make the next financial crisis more likely, and that puts a damper on economic growth.
The prevailing false narrative for the financial crisis painted banks, greed on Wall Street, and insufficient regulation as the causes, and wrote Dodd-Frank as the solution. Never mind that Wall Street greed was as old as Wall Street; that onerous regulation increased before the crisis, with the Privacy Act, Patriot Act, and Sarbanes-Oxley; and that hedge funds weathered the storm best despite their relatively light regulation.
The financial-services industry allocates the economy's lifeblood—capital—and provides payments. In the new era of crony capitalism, the assets remain in private hands, but the supervisors and allocators of capital are Washington mandarins.
While Dodd-Frank batters the industry with suffocating regulation, it doesn't address the principal causes of the financial crisis: the Fed's easy credit and government's politicized mortgage-credit standards.