June 25, 2012 12:17PM

New Bank Regulations Spawn Doom Loop

Politicians have a genius for creating unintended consequences with each of their new firefighting measures. Just consider bank regulations. Today, reportage by Brooke Masters in the Financial Times informs us that the bill for new bank regulations in the EU could balloon to 50 billion euros. These regulations are intended to make banks “safe.” But, alas, they will suppress the money supply and economic activity. In consequence, new bank regulations, in the middle of an economic slump, promise to make banks less, not more, “safe” — a doom loop. Now is not the time to send in the Boy Scouts.