In their classic, A Monetary History of the United States, 1967- 1960, Milton Friedman and Anna Jacobson Schwartz observed that FDR’s bank holiday, shortly after he took office in 1933, which was supposed to have been a cure was, in reality, “worse than the disease.”

A recent WSJ OpEd piece titled “The Dodd-Frank Downgrade” suggested that it, too, created a worse situation: “by issuing a series of downgrades of giant banks this week, Moody’s Investors Service may have performed a taxpayer service. Two years ago President Obama and Congressional Democrats told Americans they have strengthened the banking system and revoked too-big-to-fail privileges from the financial giants. Now Moody’s can help Americans understand  that the Dodd-Frank law has fulfilled neither promise. The law’s signature achievements are higher costs, reduced opportunities and weaker banks.”

This post isn’t intended as a criticism of our president or the Democrats in Congress, but rather how unintended consequences can lead to results not necessarily foreseen, which can put us in worse shape. This appears to have been the case with this law.

Any rule making body runs the risk of causing such difficulties. When rules are considered their intent is usually for the good, but on occasion create unintended difficulties for those the rules are  designed to serve. Unfortunately, it is often difficult to project ahead what the impact may be. This is one of the benefits of soliciting public comment in advance of making rules official. And while this isn’t a fail-safe measure, it at least provides additional opinions to surface which may, in fact, reveal problems that would result.