Wall Street Is Using the Power of Dodd-Frank Against Itself
Rent-seeking tends to be a force against innovation and for stagnancy, in large part because its focus is on the past — on maintaining power and influence gained long ago, often at the expense of innovation. Businesses built around rent-seeking don’t try to increase the size of the pie; they just want to make sure they get a bigger slice. (If a company doesn’t seem to care about your opinion of it as a customer, there’s a good chance that it is seeking rents.)
.. The depth of the inquiry was notable because the school is generally thought of as a Wall Street-friendly training ground for future bankers. One of the most striking findings was that between 1980 and 2000, the large banks in America had significantly moved away from productivity enhancement and toward rent-seeking.
.. To fight rent-seeking, we would need banking laws made up of straightforward rules that educated laypeople could understand. They would have to eliminate our maddeningly complex regulatory infrastructure. There would be trade-offs: The financial system might not perform as efficiently, and the economy might not grow as quickly during boom times. But if done right, an overhaul of banking regulations could create a political context in which rent-seeking self-enrichment by banks is no longer the norm. We might even come to call it what it is: corruption.