Just as we were told that World War I was the war to end all wars, we were told that the Dodd-Frank Act, passed in 2009 at the end of the Great Recession, would prevent all future bank bailouts, and stop the banks from ever again plunging the country into another deep recession. The means of achieving these ends was to be pervasive federal bank regulation, as if federal bureaucrats would understand the banking business better than the banks themselves.

In fact, instead of Dodd-Frank pre-empting the need for any future bank bailouts, the legislation established a legal framework institutionalizing bank bailouts, establishing in law the means of financing and the authority for such bailouts. And the pervasive federal regulation of banking only served to drive many banks out of business altogether, especially smaller local and regional banks that provided credit to small business.