I’ve expressed skepticism about the move by regulators to take advantage of the 2008 financial crisis to impose more control on business by government in previous postings on this link. The negative impacts from the massive Dodd-Frank law continue to mount. I don’t know how to measure the impact from businesses being cautious about their plans until the hundreds of new regulations are finally developed and implemented. However, there are some negative impacts being experienced by small businesses and people employed by the banking industry.

David Migoya wrote an article in the Denver Post discussing how the limits on bank card fees are adding costs to small businesses that are or will be passed to consumers. Dodd-Frank decided that the previous charges to retailers of 42 cents per swipe of a debit card was excessive, and capped the charges at 22 cents per swipe. They had previously charged as low as 2 cents for a dollar transaction and that escalated on a graduated scale up to the maximum of 42 cents. Debit card companies began charging 22 cents for every swipe after Dodd-Frank passed. According to Mr. Migoya’s article a popular site in a food court in downtown Denver was losing 3.8 % of revenue to the new fees, and the owners were worried that they would have to raise prices to remain profitable. Businesses that “…primarily run charges of less than $10 are being slammed.” Vending businesses are faced with raising prices to protect already thin profit margins. I expect that Mr. Dodd and Mr. Frank would explain that it was worth it to try and prevent banks from making a profit.

A report by the Financial Services Committee titled “One Year Later: The Consequences of the Dodd-Frank Act” by Chairman Spencer Bachus and Vice-Chairman Jeb Hensnarling does not report that the act had the intended consequences of improving the economy. The hundreds of new Federal Regulations creating massive bureaucracies when the economy is fragile had the opposite effect. The regulations did not address “too big to fail,” but instead provided financial support to large financial companies while businesses “…too small to save are left to fend for themselves.” The Federal Reserve Board’s Chairman acknowledged “…that the government is not capable of calculating the effect of the cumulative regulatory burden imposed over the past year…on the strength of the U. S. economy.”

It is really quite simple. The government decided that there were 387 new sets of rules needed. Most of the new bureaucracies haven’t had high level positions filled to impose the regulations, few if any deadlines to impose regulations have been met, and businesses that could be the engine to economic growth are waiting to see what the government is going to do.

Let me ask a question that makes the question personal. What would you do if you were contemplating a new business if you didn’t know what the government was going to require? What would you do if you were an existing business that will undoubtedly be impacted by whatever the new regulations might be? Would you hire people thinking the new regulations will be “business friendly?” I think the answer is “Not likely.”

I saw a report on CNBC about the banking industry, and there have been about 40,000 jobs cut from large banks, I’m guessing the people who lost their jobs were not those who received huge bonuses for driving the businesses into huge losses during the 2008 economic crisis. They were probably “middle class Americans” who had nothing to do with the risky investments that caused the crisis. Of course the Dodd-Frank law didn’t do anything to help those people since they were associated with “big banks.”

The quest of the government to protect “average Americans” has harmed thousands of “average Americans.” Perhaps someday we will learn that more government doesn’t help. Perhaps not.