Recently, people have started to notice that government employees, especially federal employees are starting to make more money than private sector employees. USA Today reported in March that federal employees had salaries of over 12% more than private sector employees in 2008. And, this noted that the benefits were even higher:

These salary figures do not include the value of health, pension and other benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker, according to the Bureau of Economic Analysis.

One would think that with regulators failing or watching porn and the public’s estimation of government at an all-time low, Congress would be interested in doing something about this. Not Chris Dodd or the Democrats. Instead, his financial regulation bill actually creates a whole office full of government bureaucrats with unlimited salaries. Let’s look at the text of Section 152 (d).

(d) OFFICE PERSONNEL
(1) IN GENERAL
—The Director, in consultation with the Chairperson, may fix the number of,
and appoint and direct, all employees of the Office.

This means that the Director of the Office of Financial Research picks the size of the department, not Congress. And their pay is set at the discretion of the office, not subject to the rules governing civil servants.

(2) COMPENSATION
—The Director, in consultation with the Chairperson, shall fix, adjust, anadminister the pay for all employees of the Office without regard to chapter 51 or subchapter III ofchapter 53 of title 5, United States Code, relatingto classification of positions and General Schedule pay rates.

Let me make sure I get this right.

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In the wake of the massive bank bailouts, nearly everyone is calling for some kind of financial regulatory system overhaul. The Obama administration has outlined what it would like to see and Congress is currently holding hearings on how to best reform the regulatory structure. But the lobbying began long ago.

Big banks are squaring off against smaller banks in the debate over consolidating national banking regulatory powers. All banks are lining up against financial institutions like hedge funds on the regulation of products like derivatives. Even the regulating agencies are competing against each other in hopes of garnering more power.

Unfortunately, if Congress makes choices on political criteria alone, reforms are likely to damage the country’s economic recovery.

Instead, there are three guiding principles that lawmakers should bear in mind when writing new regulations for Wall Street.

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When I first learned to drive as a teenager, my mother let me take the wheel on trips to the local grocery store. She was there in the passenger seat, arms flailing every time a squirrel or a piece of sagebrush came across the road, her left forearm pressing my chest back against the seat. It was instinct. She wanted to brace me for the impact of a crash. The only problem was that I needed both arms free to keep the van from crashing in the first place. While I appreciated my mother’s concern, I hated the thought that she might protect me to death.

Which is the same attitude every American should have when it comes to the new consumer financial protection laws President Barack Obama and Rep. Barney Frank (D-Mass.) want to impose on businesses.

Obama first proposed the idea of a Consumer Financial Protection Agency (CFPA) in June as a part of his grand plan to overhaul Wall Street regulations. But it has come under considerable attack recently for fear it would smother businesses and end up hurting consumers. As I write for Reason Online, in its current form, the CFPA will pile on burdensome new rules, restrict innovation, hurt small businesses, increase the cost of doing business, spawn a massive bureaucracy, and create severe conflicts between state and federal law. Frank’s proposed version would even allow the new agency to write and enforce laws beyond the scope of existing legislative authority. (more…)