Dodd-Frank Reform a Huge Dud: Why We Need to Repeal Dodd-Frank

The Great Recession was the worst financial crisis since the Great Depression. It hit millions of people across the globe as jobs and wealth disappeared. In response to this catastrophe, the United States government passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). This bill was the most significant financial reform to take place in the United States since the Glass-Steaggal Act (see my analysis on that Act here). The purpose of Dodd-Frank, according to the Act itself, was to "promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail," to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and other purposes." What I would like to do today is see if Dodd-Frank accomplished its primary goals (Congressional Research Service primer on Dodd-Frank here), whether there were unintended consequences, analyze the Dodd-Frank reform bill that passed last week (S.2155, also known as the Economic Growth, Regulatory Relief, and Consumer Protection Act), and subsequently determine whether this reform bill was the best course of action.

There have been some good things to come out of Dodd-Frank. The Minnesota Federal Reserve Bank found that Dodd-Frank reduced the probability of a bailout in the next 100 years from 84 percent to 67 percent. The Wharton School of Business points out that Dodd-Frank provided oversight over payday lending, includes measures to protect retirement money savers from abuse, and has disclosure requirements on derivatives and for oil companies on their payments to foreign government. For another, the Left-leaning Center for American Progress calculated that for every dollar of funding provided to the Consumer Financial Protection Bureau (CFPB), it has returned $5 dollars to victims of financial wrongdoing (or $12 billion in total). If you want a better view of CFPB, here is my literature review of CPFB from two-and-a-half years ago.

Nevertheless, there are multiple issues to take with Dodd-Frank, as are pointed out in detailed criticisms from the Heritage Foundation and Mercatus Center (also see Brookings Institution analysis here for a mix of praise and criticism). Here are but a few I found while conducting research on the topic:

• Effects on community banks and credit unions. In December 2015, the Government Accountability Office (GAO) found that community banks and credit unions are disproportionately hurt by Dodd-Frank because they do not have the same capacity that larger banks do to handle compliance. As a result, these smaller financial institutions have reduced the availability of credit to their customers. A working paper (Lux and Greene, 2015) from Harvard University confirms the GAO findings. This paper calculated that commercial banks' assets declined at a rate more than double than that between 2006 and 2010. The authors contributed this decline to Dodd-Frank. 
• Cost of borrowing for small businesses. Evidence suggests that borrowing for small businesses became more expensive since 2010, which hampers job creation and investment (Chen et al, 2017). Another study from the National Bureau of Economic Research confirms that commercial and industrial loans dropped nine percent since Dodd-Frank, and was due to said regulations (Bordo and Duca, 2018).
• Price tag of regulatory compliance. According to the American Action Forum, eight years of Dodd-Frank has cost $38.9 billion and 82.9 million man-hours. That exceeds the $12 billion recovered by CFPB. 
• Cost to Consumers. The American Action Forum also found that Dodd-Frank is responsible for cutting revolving credit by 14.5 percent. This is important for consumers because as the World Bank discovered, there is a strong correlation between financial inclusion and economic growth or employment (Cull et al., 2014).
• Middle-Class and Mortgages. Another cost is squeezing the middle class out of the housing market. According to a study from the University of Maryland (D'Acunto and Rossi, 2016), the combination of a 3 percent cap on mortgage-related service fees and a more costly process for verifying customer's income. This change in underwriting incentivized banks to slash the number of loans at the median income and target wealthier individuals.
• Less competition in the banking sector. There is a study that took a look at Dodd-Frank's effects on bank acquisition behavior (Bindal et al., 2017). This study is important because it shows unintended consequences of Dodd-Frank creating more regulations for banks with more than $50 billion in assets. On the one hand, very small banks are more likely to partake in acquisitions. On the other hand, they make sure to stay below the $50 billion mark so that they do not get hit with Dodd-Frank regulations. This is significant because it creates a barrier to entry in the mega-bank submarket, which solidifies market share and overall power for the already-existing mega-banks. It is another example of how regulations squash the smaller business owner, protect big business owners, and artificially encourage business consolidation, thereby perpetuating the cycle.  
• Big banks are not safer. A study from Lawrence Summers, a major supporter of Dodd-Frank, concluded that big banks are not safer, even in spite of decreased leverage (Summers and Sarin, 2016).
• Financial sector not healthier. A study from the National Bureau of Economic Research suggests that it was post-crisis regulations that are strangling financial sector growth (Chousakos and Gorton, 2017).

Dodd-Frank Reform Bill and Conclusion
If you look at the reform bill, there was not much that was reformed relative to what was initially enacted in 2010. Yes, the bill is going to ease up on supervision, which is one of the major contributors to Dodd-Frank's regulatory costs (see above). It is also exempts smaller banks [with $10B or less in assets] through the community bank leverage ratio. The SIFI (Significantly Important Financial Institution) threshold increased from $50B in assets to $250B, although there are multiple caveats attached in the Senate bill. There will also be some deregulation on stress testing, i.e., companies only have to perform two stress tests instead of three. In short, the bill primarily provides targeted relief for smaller banks.

In its analysis, the Congressional Budget Office (CBO) finds that the bill will slightly increase probability of financial crisis, although it fails to qualify that further. Former Congressman Barney Frank, who was a co-author of the bill, thinks that the reform will not make a big dent into the impact of Dodd-Frank. From Frank's standpoint, that's probably a good thing. The good news is that it doesn't like the bill is going to cause catastrophe to the U.S. financial system.

I will say that although the bill goes in the right direction, it is still inadequate. Being an 849-page bill with over 27,000 regulations, Dodd-Frank still has a stranglehold on the financial markets. Even the GAO admitted that Dodd-Frank did nothing to simplify oversight over the financial sector (see below). I know that this compromise bill was passed because they could not get votes for downright repeal. However, I still contend that even in spite of certain advantages to Dodd-Frank, repeal is still a desirable goal.

For more on financial regulation reform, see analyses from Manhattan Institute and Heritage Foundation. 

Dodd-Frank a Dud at 15: How Dodd-Frank Stifles the Financial Market

This week marks the 15th anniversary of the Dodd-Frank Wall Street Reform Act, or Dodd-Frank for short. Following the 2007-2008 financial crisis, Congress mistakenly believed that the Great Recession was caused by lax government regulation in the financial sector. In response, Congress passed the 2,300-page behemoth with 400 new rules and mandates for federal regulators known as Dodd-Frank. It remains the largest and one of the most complex pieces of legislation in U.S. history. As the title of today's piece indicates, Dodd-Frank has been a dud in financial regulation.

Dodd-Frank failed its central mission. One of the main purposes of Dodd-Frank was to prevent another systemic banking crisis. However, the United States experienced another crisis in March 2023 that involved bank runs and emergency bailouts. As I detailed in my response to the March 2023 crisis, there were plenty of regulations in place to possibly prevent it. Rather, it was the inability of federal regulators to perform their job of detecting the buildup of interest rate risk at several banks. 

Dodd-Frank increased moral hazard. The 2023 banking crisis is not surprising since Dodd-Frank's regulatory model encouraged banks to rely more on insured deposits instead of private market funding sources such as subordinated debt. With reduced market discipline, it disincentivized close monitoring of banks. The 2023 banking crisis is a fine example of higher moral hazard, which in turn increases the likelihood of another banking crisis due to Dodd-Frank regulations.

Impact on smaller banks. As with many other regulations, Dodd-Frank has disproportionately affected smaller banks. There were 157 major final rules and programs from Dodd-Frank that affected smaller banks. This creates a significant compliance challenge since smaller banks often have limited staff and expertise to handle the additional compliance. As a 2020 study from the Federal Deposit Insurance Corporation (FDIC) shows, these regulations contributed to a higher exit rate of smaller community banks (see below); a larger minimum size that discourages new community bank formation; and reduced their residential mortgage holdings, which is a major source of revenue for smaller banks. 

Debit card fees. The Durbin Amendment of Dodd-Frank capped interchange fees on debit card transactions. As the Americans for Tax Reform argues, this price control cuts off revenue for fraud protection; hurts consumers with rising account fees and fewer rewards programs; and did not deliver on the promises to lower prices. I made a similar argument when criticizing Congresswoman Ocasio-Cortez's argument for interest rate caps. After reviewing the academic literature, it turns out that the Durbin Amendment led to higher bank fees, increased reliance on costly credit cards, and caused one million Americans to become unbanked. 

Increased lending costs harm consumers. Another amendment of Dodd-Frank is the Collins Amendment. The Collins Amendment imposed strict capital and leverage requirements, especially when combined with Basel III standards. As the Institute for Financial Markets points out, these strict capital requirements increase lending costs. Why? Banks need to raise more capital to meet these capital requirements. As a result, the most likely outcome of high capital requirements such as those in Dodd-Frank is that consumers pay higher interest rates or fees (FDIC). These capital requirements also make it more difficult for borrowers to qualify for loans or afford them, thereby limiting financial tools to the everyday American.

Consumer Financial Protection Bureau (CFPB) harms consumers. To protect U.S. consumers from risky financial decisions, Dodd-Frank included a provision to create the CFPB. The CFPB is supposed to be responsible for regulatory oversight over consumer financial products. However, as I brought up this past February, the CFPB has been a disaster that needs to be eliminated. Forget that the CFPB duplicates the roles of existing state and federal regulators. CFPB policies, especially fee caps and credit reporting restrictions, distort market incentives, restrict access to mainstream financial services, and push vulnerable individuals toward riskier alternative financial options. Furthermore, the CFPB lacks accountability, operates without adequate oversight, and implements ideologically driven regulations that do nothing to protect the everyday consumer. 

Postscript. Given the sheer size of Dodd-Frank, there is plenty more I could cover, including, but not limited to, the Volcker Rule, Orderly Liquidation Authority (OLA), and the Federal Insurance Office within the U.S. Treasury. What I will say is the following. While Dodd-Frank was meant to avoid another financial crisis and maintain stability in the financial markets, it has been riddled with failure and unintended consequences. 

The regulatory framework was not only inadequate to prevent the 2023 banking crisis, but it increased moral hazard, harmed smaller banks, and increased consumer costs for financial services. Dodd-Frank has been more of a hindrance to the financial markets than a help. With its complexity, inefficiency, and lack of accountability, the 15th anniversary of Dodd-Frank should be spent repealing this dud, not celebrating it.

One Year After Dodd-Frank: Are We Better Off?

Last Thursday was the one-year anniversary of the signing of the Dodd-Frank bill.  The Dodd-Frank bill was a regulatory overhaul of finance reform and regulations that, according to the bill, is supposed to "promote the financial stability of the United States by improving accountability and transparency in the financial system, to end 'too big to fail,' to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes."  After a year of signing this bill into law, the question at the moment is whether the bill has brought more stability and security to our financial institutions. 

I wanted to see what the Left had to say on the issue since they love regulating the economy so much.  In typical NYT fashion, The New York Times said that the reason why Dodd-Frank hasn't been able to get off the ground is because the Republicans are blocking nominations of certain key posts at financial institutions.  That might have to do with something that the bill was not bi-partisan and Mr. "I'm Going Reach Across the Aisle" Obama didn't help with transcending party lines, as if that were a shock.  CNN also stuck up for Dodd-Frank.  They pointed out the provisions that have already gone into effect, even though they pointed out that the Republicans are blocking funding efforts to get most of the initiatives going.  I couldn't find anything from Left-leaning think tanks on the one-year anniversary, although I found an article from last March from the Center of American Progress.  As those on the Left do, they blamed the recession on a lack of regulation, which is why they think Dodd-Frank is a good bill. 

Even the Centrist think-tank Brookings Institute favored the bill.  Since the bill is so complex, Brookings Institute fellow Douglas Elliot opines that we will have to wait another year for the benefits of the bill to fully take in effect.

Since I'm libertarian, it should be no surprise that I am not happy with the largest amount of financial regulation that this country has experienced since the Great Depression.  The bill has done nothing to end "too big to fail," which was one of the primary goals of the bill.  Larger banks normally have to pay more to borrow.  But since the passage of Dodd-Frank, the large banks pay less because according to Section 204(d) of the bill, the FDIC can buy out the debt of the bank, which is another way of saying "bailout."  If the bill gives the ability to bail out banks, I guess that banks are still "too big to fail."

Diane Katz from the Heritage Foundation points out a few reasons why this bill hasn't worked.  The first is that the bill does not address the causes of the "Great Recession," mainly being that of Big Government having its hands in the housing market by creating regulatory incentives that distorted the market.  The American Enterprise Institute (AEI) also concurs that it was government housing policies caused an unusually high number of risky loan practices that caused the housing bubble to burst.   Secondly, much like with Obamacare, when you bite off more than you can chew, you will fail with trying to regulate so much.  Plus, since when has excessive governmental regulation fixed anything?  Third, the bill has done nothing to improve the state of the economy.  As Katz emphasizes, "the unemployment rate stands at 9.2 percent. The budget deficit tops $1.3 trillion, and federal debt has hit the ceiling at $14 trillion. Consumer spending is tepid, wages are stagnant, and prices for energy and food are rising."

Even the Cato Institute found that Dodd-Frank did not mitigate much. According to Cato Institute Director Mark Calabria, the bill might have actually exacerbated the financial situation.  Calabria outlines that Dodd-Frank has aggregated risk in the derivatives market, doubled the ceiling for insured bank deposits, and thereby doing what it essentially can to make sure that Big Banking doesn't fail.  This bill has created uncertainty, which is part of why this recovery is lagging.  It hasn't done anything to increase confidence in our financial institutions, which is why the University of Chicago's Financial Trust Index shows no discernible change in financial confidence.   

I'll end this entry with Calabria's overall take on Dodd-Frank:

Credit is the lifeblood of an economy, facilitating both investment and consumption. While the economy faces several headwinds, the unavailability of credit is a major problem. Rather than fix our financial plumbing, Dodd-Frank has largely clogged up the channels of credit further. The new Consumer Financial Protection Bureau could likely represent a massive litigation risk for lending. The result is both a higher cost of credit for consumers and reduced availability. Hardly a recipe for economic recovery.

The Smithsonian's Take on "White Culture" Begs the Question: When Does "Wokeness" Start to Resemble Racism?

My initial plan was to write on this week's ten-year anniversary of Dodd-Frank, which is the complex bill created in response to the Great Recession that enacted multiple regulations of the finance industry. But then I remembered that I wrote on Dodd-Frank a couple years ago, so if you are interested in my scrutinizing of Dodd-Frank, here you go! Today, I am going to write on a different topic.

Last week, the Smithsonian National Museum of African-American History and Culture (SNMAAHC) included an infographic on its online portal about racism in the United States. The infographic was especially controversial because it outlined what "whiteness" and "white culture" are. As you see below, it includes such features as individualism, work ethic, politeness, and "objective, linear thinking." 

SNMAAHC subsequently apologized for the infographic, but if you look at SNMAAHC's website on whiteness, it is unlikely that they reject the basic underlying premise of the infographic they later retracted. Let's get into some of the reasons what is wrong with this infographic. 

1. Overgeneralizing white people is factually inaccurate. Thinking that a heterogeneous group of people spread over hundreds of miles and that encompasses multiple ethnic and religious groups acts or thinks the same way is ridiculous. Your typical Swede is culturally, ethnically, and linguistically different than an Italian or a Greek. Spanish and French culture are different than British culture. Anyone who has had any exposure to anthropology or sociology would realize this basic truth. Even with some similarities across European-based nations and cultures, it still does not negate the fact that "white culture" is not a thing because there are multiple ethnicities that are predominantly Caucasian. 

2. Overgeneralizing white people is racist. If we are to take this infographic at face value, the people at the Smithsonian believe that being white means being competitive, eating bland food, emphasizing aggressiveness and extroversion (while somehow managing to be polite), obsessing about being timely, thinking that wealth is the key to social status or happiness, delaying gratification, and valuing self-reliance. The infographic from the Smithsonian paints some very broad strokes without a) allowing for any nuance, b) recognizing that not all white people are the same, or c) acknowledging that skin color does not define the entirety of a person. I have met plenty of white people who do not have drive to succeed, would rather rely on others for their well-being, or are habitually late. If anyone were to use this line of arguing against a minority group (e.g., "Those [fill in the blank with minority group] act like this or are incapable of doing that", "They are all the same"), it would be immediately construed as racist, and rightfully so. The question is whether it would be racist if the comment is targeted towards white people. Let us take a look at what Merriam-Webster has for a definition.

This past June, Merriam-Webster updated the definition of racism. Fact-checking site Snopes points out that Webster's did not change it so much as they contemporized the definition to make it relevant for modern times. The dictionary definition does recognize institutional and systemic racism (Definition #2), but it also acknowledges individual racism (Definitions #1 and #3). Per what is in Merriam-Webster, it is possible to be prejudiced against white people, least of all because there is not an exemption for a racial majority. Here are some real-life examples of pejorative terms used towards white people:

• Literally meaning "albino," the Indonesian word bule is a derogatory word for white person.
• The Chinese also have a phrase: guilao (鬼佬). This terms means "white ghost." It is used as a pejorative term for white people. In Singapore and Taiwan, they use the term ang mo (紅毛).
• There are some derogatory terms for white people used in the United States, including "cracker" and "honky", "whitey," and "peckerwood." 
• In Afrikaans, japie is a mildly offensive term for "white person" or "farm boy." 
• The Spanish language, particularly in Mexican Spanish, also has a term for white foreigners that assumes the white foreigner is monolinguistic and does not appreciate Latino culture: gringo or gringa.
• Farang (ฝรั่ง) is the Thai word for white people. Based off this word, the Thai phrase farang khi nok (ฝรั่งขี้นก) means "white trash."

This list is not meant to minimize or ignore ethnic or racial slurs used against minorities. Since minorities on average go through more hardship in life, what a typical minority undergoes in terms of discrimination and prejudice is of greater magnitude than what someone of the majority race or religion goes through. At the same time, it does not exclude the fact that people can also be prejudiced against white people. The ability to be prejudiced is not confined to one racial group or a certain political persuasion. Having biases and prejudices is part of the human condition.    

3. The values in question are not specific to white people. Individualism has been increasing globally (Santos et al., 2017). Working hard is not unique to the United States: the Protestant work ethic exists in much of Europe, not to mention that China and Japan are also known for high work ethic. Christianity is a religion practiced by millions of non-white people throughout the world, including Africans, Latinos, and Asian people. Nuclear families exist in many non-Western cultures, including the Middle East, Africa, Latin America, and East Asia. I can go on, but the point remains the same: so many of these values extend beyond the United States or Caucasians. 

4. Implications of taking issue with these values. If you look at the language used by the SNMAAHC on their website about whiteness, it does not take much to infer that they take issue with the "white-dominant culture." They point out how whiteness includes individuality, the nuclear family, "objective, rational linear thinking," the scientific method, jurisprudence based on British common law (which includes "innocent until proven guilty," a cornerstone of the U.S. legal system), and politeness. Does this mean that racial minorities that show up on time, use logic, or take personal responsibility for their lives are "acting white?" Were Frederick Douglass and Harriet Tubman internalizing whiteness when they emphasized freedom and "rugged individualism" in their lives? Was George Washington Carver acting "less black" when he used the scientific method to make his discoveries? Does the infographic imply that the people at the Smithsonian do not expect minorities to be on time or to work hard? I am sure that Muhammad Ali and Jesse Owens worked tirelessly when they made their way towards competing in the Olympics. Isn't it possible, indeed probable, that hard work, timeliness, logical thinking, and wanting to be the best one can be are values that are not simply for "the white folk," but indeed values that all people can and should strive for, regardless of race or ethnicity? 

Conclusion

It might be alluring to think of the Smithsonian debacle as an isolated incident, but viewing the predominance of "white culture" through this lens has become more prominent in U.S. society, particularly of those who consider themselves "woke." Although it is most commonly associated with the Far Left, the idea of being "woke" started off to simply mean "awareness of racial and political justice." It is one thing to want to fight inequities in society or to make the world a better place than you found it. After all, it can help bring us closer to that ideal of "life, liberty, and pursuit of happiness" for all citizens of the United States. 

Comedian Ryan Long covers this in a sketch (see below), but I do have to wonder at what point does acting "woke" mimic or parallel the views or behaviors of racists. Do you reach that point when you call advocating for a color-blind world a microagression because it collides with your worldview? Is it when you think racial identity is one of the most important, if not the most important, things there is? Is it when you look at others primarily or solely through the lens of race? How about when you make sweeping generalizations about an individual because they belong to a certain racial or ethnic group? Or is it when you see someone appreciating other ethnicities or partaking in other cultural activities and end up calling it cultural appropriation, thereby de facto calling for a form of cultural segregation (see here, here, here, here)? 

Regardless of the color of one's skin, we should all be willing to have conversations about race, even if it makes us feel uncomfortable. We should be able to talk about policies that help minimize racial inequality. Earlier this year, I have discussed on my blog eliminating police unions and qualified immunity, both of which would mitigate racial disparities in policing. We need to address issues affecting African-American citizens because the American Dream should be accessible to every citizen. At the same time, treating all white people as if they were the same or to view whiteness as a secular version of "Original Sin" is no way to bring people closer together or build broad coalitions. As Abraham Lincoln once said, "A house divided against itself cannot stand." 

Consumer Financial Protection Bureau: An Agency for the American Consumer?

The Great Recession, which has been the worst financial crisis since the Great Depression, sparked major financial regulation in the form of Dodd-Frank. Part of this 2,300-page legislation included Title X, which established the Consumer Financial Protection Bureau. The CFPB is an entity within the Board of Governors of the Federal Reserve System that is supposed to regulate the "offering and provision of consumer financial products and services under federal consumer financial laws." Republican presidential candidate Carly Fiorina took a jab at the CFPB saying that the CFPB has "no congressional oversight." Politifact rated this claim half-true since the CFPB technically has some congressional oversight, even if it is significantly lower than other agencies. Congressional oversight notwithstanding, what I would like to know is if the CFPB has succeeded in its mission statement of "empowering consumers to take more control over their economic lives." These subsequent points summarize the research I was able to find:

• The Mercatus Center released a working paper in September about unintended consequences from the CFPB, stating that "although stricter regulation of permissible debt collection practices can benefit consumers who are in default and increase demand for credit by consumers, overly restrictive regulation will result in higher interest rates and less access to credit for consumers...it may also have the unintended consequence of providing incentives for creditors to more rapidly escalate their efforts to more aggressive collection practices, including litigation."
• The Cato Institute published a research brief in February showing how the regulations with Dodd-Frank, and more specifically the CFPB, have disproportionately burdened smaller banks with compliance costs.
• The Mercatus Center also released a study back in August showing [with CFPB data] that consumer arbitration settlements are preferable to heavy-handed regulation from the CFPB. 
• To be fair and bring in other points of view, the Left-leaning Center for American Progress makes the argument in its issue brief that it has protected consumers in the mortgage market.
• The Right-leaning Heritage Foundation put out an issue brief earlier this month showing how payday lenders provide a vital service to the financial sector, as well as how regulating these lenders compounds issues burdens in the financial sector.
• The CFPB has created a "Qualified Mortgage" category that has imposed strict home financing standards for lenders and borrowers alike. 
• Checking accounts have become more expensive for lower-income family households, which is why these households have gravitated towards prepaid cards. As the American Action Forum illustrates, recently proposed CFPB regulations would most probably eliminate prepaid cards as an option, thereby leaving more unbanked Americans.

As the Federalist Society points out, we should not "impose 19th century regulatory approaches to a 21st century credit consumer economy." Having an agency with a director who has de facto power to deem any consumer product or practice "unfair" or "abusive" is perturbing indeed. Back in its 2013 report on the CFPB, the Heritage Foundation made some suggestions for reform, including striking the undefined term of "abusive" from the CFPB's purview, prohibiting public release of unconfirmed complaint data, abolishing the deference in judicial review granted to the CFPB, and downright abolishment of the CFPB. At the end of the day, we should make it easier for the American people to have access to credit, not more difficult. While the passage of time will better tell us whether the CFPB helps the American consumer, it seems that there is enough out there to make us doubt whether CFPB regulations have done more good than harm.

If you want more information on the CFPB, you can go to the CFPB's website, read this Congressional Research Service brief, or this financial audit from the Government Accountability Office that was released earlier this week.

Consumers Will Be Fine If Trump Gets Rid of the Consumer Financial Protection Bureau (CFPB)

There has been a flurry of Trump attempting to curtail or eliminate entire departments, whether that is the Department of Education or the United States Agency for International Development. Another department is making its way to Trump's chopping block: the Consumer Financial Protection Bureau, or CFPB. On February 9, CFPB Chair Russ Vought told CFPB employees to not pass any new regulations and to desist any current investigations, as well as stated that the CFPB will not be drawing its next quarter of funds from the Federal Reserve. One federal judge ordered a temporary stay on Trump firing CFPB employees, but the case will be re-heard elsewhere on March 3. Why should we care?

CFPB was enacted in 2011 by Congress as part of Dodd-Frank in response to the financial abuses after the 2007-2008 financial crisis. The intention of CFPB was to the United States' consumer finance watchdog to protect U.S. consumers in the future. Admittedly, I have not written that much on the CFPB. I created a literature review in 2015, but did not come to any concrete conclusion about CFPB. In 2018, I scrutinized Dodd-Frank, including the fact that the costs with regulatory compliance overshadow the benefits that CFPB was claiming about its existence. Last year, I especially criticized a CFPB rule that put overdraft fee caps on banks, which upon examination, harm the consumers they were meant to protect. The fees exist to cover cost and mitigate risk. Banks will find other ways to account for these costs and risks. 

This does not get to the fact that we do not need a CFPB because it is redundant. For one, the state governments already have financial regulation and oversight, a reality that has played out in past prosecutions. Furthermore, the federal government already has numerous financial regulators (see below), including the Federal Trade Commission (FTC), Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Federal Deposit Insurance Corporation (FDIC). 

Aside from redundancy, the CFPB does not have an understanding of what it actually means to protect consumers. This goes beyond the previous example of overdraft fee caps that limit financial services to low-income households:

• Ban medical debt from credit reports. In June 2024, the CFPB proposed to ban medical debt from credit reports to help out those who are burdened by medical debt. Thankfully, it has not been implemented yet. Low-income households are the ones most likely to have medical debt. Lenders are not going to ignore the absence of medical debt on the credit report, but instead will likely assume that there is undisclosed medical debt. This would lead to increasing borrowing rates, which could very well direct low-income households to less conventional forms of borrowing (e.g., payday lenders, loan sharks). Hiding information does not help, much like ban-the-box laws backfired and harmed African-American men who were not criminals and looking for a job.  
• Credit card fees. In 2023, the CFPB wanted to go after credit card fees. The Cato Institute rightly criticized this policy. I also criticized Bernie Sanders and Alexandria Ocasio-Cortez (AOC) for proposing a credit card fee cap in 2018. After examining the history of interest rate caps, I concluded that a) high-risk borrowers will be cut off from the mainstream credit system, and b) lenders will find other clever ways to make up for the loss in their terms and conditions. 
• Payday loans. In 2016, CFPB issued a rule on regulating payday loans, which was overturned in 2020. I am glad this was overturned. I wrote on payday loans a couple of years ago. While payday loans are not an ideal financial instrument, putting the squeeze on payday loans means that these consumers go to less savory options, such as loan sharks, pawn shops, or putting a second mortgage on their home.   
• Anti-arbitration bias. In 2015, the CFPB tried to pass a law banning companies from instating mandatory arbitration agreements, instead of class action lawsuits. In spite of this rule being overturned in 2017, the CFPB continued with its anti-arbitration bias by creating a database in 2023 to help track which companies track arbitration agreements. Not only are private arbitration courts cheaper and quicker (7 months versus 3 years), but there is no evidence between arbitration agreements and being subject to CFPB action (Pham and Donovan, 2023), thereby implying that arbitration agreements are not a threat to consumers. 

I do not even want to get into how CFPB is de facto an unelected regulator with a blank check that has next to no oversight. The CFPB has spent years pushing consumer finance policy that does not protect consumers, but rather harms them and makes it more difficult to have access to mainstream credit. I will conclude today by quoting the illustrious Veronique de Rugy:

Rather than pouring more resources into this bureaucratic black hole, especially one that duplicates the work of other agencies and programs, officials should cut their losses and abolish the CFPB. Let's return to a system based on clear disclosure requirements, competitive markets, and the enforcement of fraud laws. Consumers should be empowered, not infantilized.

Is It In Our Interest to Break Up Big Banks? Why the Notion of "Too Big to Fail" Is Too Damaging

The systemic nature of the Great Recession has made it the worst economic downturn since the Great Depression. The causal mechanisms of the recession are multifaceted and more interconnected than I care for. The government-sponsored entities known as Fannie and Freddie, regulations from the Department of Housing and Urban Development (HUD), as well as the Community Reinvestment Act of 1995, exerted pressure on banks to make taking out a housing loan much easier for low-income and middle-class families, which artificially increased the demand for home ownership. Aside from predatory lending, banks used securitization to re-package different combinations of credit-quality mortgages to better hide and evade the costs of subprime loans. Structured investment vehicles made it difficult for credit risk agencies to accurately rate loans. The Federal Reserve kept the federal funds rate low, which is problematic because artificially low interest rates come with adverse consequences, including excessive borrowing and risk-taking. In addition to an increasingly materialistic society, consumers thought that they could borrow at such low rates without consequences, and thus racked up a ton of consumer debt (see consumer debt to GDP ratio). To summarize the South Park episode Margaritaville, "there is plenty of blame to go around."

Since the Great Recession, there has been a call for dealing with banks that are "too big to fail (TBTF)." Many would like to see these big banks broken up into smaller banks so that we can avoid another calamity like the Great Recession. I'm no fan of Big Banks getting into bed with Big Government and receiving special treatment and favors, but is breaking up big banks the proper move?

What makes a bank too big to fail? We do not know if the banking system would have come apart had we not bailed out the banks under the Troubled Assets Relief Program (TARP). The idea of TBTF might be a plausible theory, but it's still only a theory that has yet to be substantiated. What makes a bank TBTF is based on what regulators believe to be too big, which in the case of Dodd-Frank, is $50B in assets. By that regulation's logic, the Federal Reserve is too big to fail. Given that the GDP is over $15T, I highly doubt that a bank with $50B would bring a collapse of the financial system, especially since the banking system make up a smaller portion of the GDP than other developed nations. Plus, how does one determine whether a bank will be TBTF down the road? What size does a bank need to be for a regulatory institution not to meddle?

I have to wonder if anyone thought of the implications of actually breaking up a big bank. Trillions of dollars pass through the global markets each day. If one breaks the larger banks up, would a smaller bank be able to efficiently handle all of those transactions? Operations simply would not be the same. What would happen to the risk-managment systems that deal with interest rate swaps or currency swaps? They would be diminished. Also, downsizing banks would affect downsizing operations, which means it would affect the one million-plus jobs in banking, and this does not even get into hypothetical transition costs.

If a bank is TBTF, there is a good chance that a bank is also too big to properly regulate. The government's legislative response was to pass Dodd-Frank, which was a bill of over 800 pages and came with 13,000 pages of regulations. This regulatory overhaul puts smaller banks at a competitive disadvantage because they do not have the same resources to ensure compliance with the regulations. Breaking up the banks would put the banking industry at an even larger disadvantage because none of the banks could handle the regulatory overload.

The consumer would also feel the cost of breaking up big banks because of the economic advantage of larger banks. The joy of larger banks is that they use the economies of scale by spreading the costs of infrastructure, technology, and other capital investments diffusely over a larger base, which means these banks can cut the cost of banking, as well as expand the scope of services rendered. Breaking up the banks would sacrifice valuable efficiencies by limiting the extent of the bank's services while increasing costs.  

The notion of TBTF only perpetuates the bailout mentality that creates moral hazard (see here and here) and a contagion effect. Reducing bank size does not solve the issue, as someone as Paul Krugman points out. Smaller banks have failed in the past, as we saw both in the Great Recession, Great Depression, and the Savings and Loan Crisis. Just look at MF Global, Bear Stearns, or Knight Capital.  What matters is the interconnectedness that financial institutions experience, regardless of a financial institution's size. The collusion between Big Banking and Big Government needs to stop, that much is for certain. But what can be done to help prevent the past from repeating itself? Bankruptcy laws (or even laws governing shadow banking) can be reformed, e.g., "living wills," to make sure that these firms can fail without causing breakdown of the economy. Alternatively, we can implement stricter capital requirements, higher reserve requirements, or we can even implement a contingent convertible debt requirement. However, to say that we need to break up big banks, especially without knowing what breaking up banks would trigger or even define how big a bank should be, is not a solution. In short, we need to abandon the idea of "too big to fail."

Breaking Up the Big Banks Would Presumably Be a Big Disaster

Bernie Sanders had quite the interview with New York Daily News a few days back. Part of the interview entailed his plan to break up the big banks, the ones that are labeled "too big to fail".  Essentially, the "too big to fail" theory postulates that certain [financial] institutions are so large that the failure of one or two large banks will bring down the whole system. To mitigate this contagion effect, Sanders would like to chop up the larger banks into smaller, less connected institutions to minimize the effect of institutional failure of a certain financial institution. Only a couple months ago did the President of the Minnesota Federal Reserve Neel Kashkari announce that he was going to create a plan by the end of this year to break up banks that are "too big to fail" (TBTF), so at least this time, there is some independent support of a Sanders platform policy. The question here is whether breaking up big banks would work or if it is another one of Sanders' overly simplistic idea to solve something as complex as financial market failures. Let's bring up some of the finer points of the problems faced with breaking up the bigger points. While I will use hyperlinks to various sites for citation purposes (also read Clearinghouse presentation for more information on big banks), an October 2014 policy report from the Bipartisan Policy Center [BPC] (also on the Brookings Institution website) on breaking up big banks (which is well worth the read if you're particularly interested in the topic) will provide a sizable amount of content:

• Breaking up big banks is no guarantee of preventing financial crisis. While TBTF is a plausible theory, the underlying rationale for determined whether a bank is TBTF has never been demonstrated as true. Looking back at the Great Recession, financial institutions, whether large or small, would have collectively had the same incentives to operate with too little capital or liquidity (BPC, p. 35). Paul Krugman brought this up in an article last week lambasting Sanders for his naïveté on the issue. As Krugman pointed out, predatory lending was carried out by smaller, non-Wall Street institutions such as Countrywide Financial, and the crisis itself was centered on Lehman Bros., a small "shadow bank." Bear Sterns, Washington Mutual, and Wachovia were also smaller financial institutions that were central to the financial crisis, and "breaking them up" would not have stopped the overindulgence in risky mortgages. Other institutions, such as AIG, Freddie Mac, and Fannie Mae were not banks, but greatly contributed to the Great Recession. We also have to recall that the Great Depression was not caused by big banks, but a flurry of small bank failures. 
• Size matters. It might be politically expedient to malign "evil corporations" or billionaires, but the truth is that there are advantages that come with larger banks. Large banks come with economies of scale, which is the cost of unit per output decreases with scale since fixed costs are more spread out with each unit of output. Economies of scale is helpful for platform creation and developing human capital. A larger scale means being able to underwrite a large bond, loan out larger sums of money, and expand customer base. Globalization has also meant that being able to contend with international regulatory compliance and develop a more nuanced information-technology infrastructure (BPC, p. 19). Banks can also provide a wider range of [complementary] services, including financing, foreign exchange, risk management products (e.g. derivatives, and other operational services (BPC, p. 20). As another example, the widespread usage of the ATM machine was made possible because of large banks (BPC, p. 22). Larger banks also help the customer since the costs of infrastructure, technology, and capital expenses are spread out over a larger customer base. All of these benefits are either easier to come by with larger banks, or can only come into fruition with larger banks.    
• How big is "too big?" There is no objective way to determine what is "too big" in terms of asset size. Until we can measure the costs and benefits of breaking up banks more effectively, there is no way to determine what is "too big (BPC, p. 35)." And while we're on the topic of size, if we compare banking to other markets, banking is relatively not concentrated, especially when you compare it to pharmaceuticals, automobiles, and computers. Also, when comparing American banking to that of its foreign counterparts, the United States' banking market is far less top-heavy. When looking at the assets of the United States' five largest banks, it is less concentrated than any of the other G-7 nations, and is less concentrated the the G-20 average (BPC, p. 31). The banking assets to GDP ratio in this country is also lower than the U.S.' foreign counterparts. 
• Transition costs. For one, there would be a loss of customer focus. Transitioning would be all about internal reorganization. Customer relations would also be interrupted. How would you untangle the network of assets and liabilities interwoven throughout the global economy? You would have to renegotiate millions of contracts, not to mention the litigation caused by the decisions made during the transition (BPC, p. 37). Another point to be made: We don't put a profit cap on other companies such as Google, Apple or Wal-Mart and declare them "too big to fail." Much like any other company, if you tell a company they can only make so much profit, I can tell you right now that is going to perversely affect how banks act. Given the desire to make up for the loss in market share, more would venture in the world of "shadow banks (BPC, p. 38)," or better yet, increase the cost of doing business or cutting jobs. And remember that when talking about job loss, we wouldn't be just talking about big-whig financiers, but working-class tellers, loan officers, secretaries, administrators, security guards, and janitors. We're talking about a financial sector with over 5.7 million people, so while some upper management would lose jobs, a lot of cuts in pay and pink slips would hit the working class for which Sanders purports to advocate.
• Domestic assets only? Even if you have determined what is "too big," there is another question: will this regulation cover international assets? If it covers both domestic and international assets, then you are encouraging a more insular market. If it covers just domestic assets, you are encouraging capital flight (BPC, p. 36). Neither are conducive for the financial sector.

Dodd-Frank, with its hundreds of pages of financial regulation, make it difficult for banks to become too big. The U.S. Government Accountability Office (GAO) published a report in December 2015 showing how Dodd-Frank adversely affects community banks and credit unions because compliance is so difficult. One can argue that such high level of compliance actually has made big banks bigger than ever. It can also be argued that during the Great Recession, the larger banks had the economies of scale to acquire the smaller, failing banks that helped make sure that a recession didn't turn into a depression. Both theories are plausible and not mutually exclusive, that's for sure.

We can discuss whether capital rules should be more stringent, whether we should create incentives to shift the cost to investors so that bad doesn't turn into worse, how we can contain liquidation processes, or whether the bigger banks should have less tax exemptions. However, one thing is clear: breaking up big banks would not do the United States economy any favors. Breaking up big banks would impose costs on banks, which would be passed down to U.S. companies and consumers. Less available credit that would cost more to access and a larger trade deficit would be but two major costs imposed upon the United States economy. Also, financial regulators are a long way away from figuring out what causes systemic risk. Capriciously dismantling the financial sector to fulfill some populist whims is something the global economy can ill-afford.

How the Department of Labor's Fiduciary Rule Will Impact Retirees and Financial Institutions

Saving for retirement can be a challenge. Depending on what you invest in, it can yield a high or low rate of return. It also doesn't help if the financial advisor helping you manage your retirement account is not acting in your best interest. As John Oliver illustrates in his episode on retirement saving last year, you could get screwed over in paying hidden and not-so-hidden fees while financial advisors could be profiting off of it. In 2015, the Council of Economic Advisors attempted to put a price tag on the bad advice from financial advisory $17 billion a year. Granted, this CEA figure has been criticized (see here and here), but it does provide a form of problem-framing. In attempts to help those saving for retirement, the Department of Labor (DOL) passed the "fiduciary rule" (see full text here). The fiduciary rule was supposed to take into effect back in April. However, Trump ordered a delay for 180 days in February, which means that the fiduciary rule is to come into effect this week.

Some of you might be asking yourself what a fiduciary even is. A fiduciary is someone who holds a legal or ethical relationship of trust, which in this context is someone entrusted to take care of money or assets for another individual. What the DOL's new fiduciary rule does is that it elevates certain financial professional working with retirement plans or providing retirement advice (e.g., investment advisory, insurance brokers) to the level of a fiduciary. What this means is that any of these financial professionals would be held up to the legal and ethical standards of a fiduciary. Financial professionals covered under this law would have to reveal potential conflicts of interest, and that all fees charged need to be clearly stated. We already have fiduciary standards under the Employment Retirement Income Security Act of 1974 (ERISA).

However, the standards are now higher with the new fiduciary rule because it means that the advice meets the client's needs and objectives. The fiduciary law has not made some financial services providers happy, which is why BlackRock and Vanguard were pushing Trump for an even longer delay. What I have to wonder is whether the DOL's fiduciary rule is more of a case of stopping financial advisors from screwing over their clients, a case of excessive regulation that will do nothing to help clients of financial services, or something in between.

At first glance, the law seems very intuitive and common-sense. The fiduciary rule was created with the intent of ensuring that investors receive quality financial advice so they can have enough to save for retirement. Why would anyone be against advisors acting in their investors' best interest? Shouldn't they be acting in a professional and ethical manner? Isn't that just good business practice? There is a difference between expecting that financial professional act professionally and adding on a litany of regulations for them to follow, and as we know, regulations come with costs.

The Right-leaning American Action Forum (AAF) released its April 2017 study on the fiduciary rule. As the graphic below shows, it is not flattering. The AAF estimates that it will cost those with an IRA an extra $813 per account per year, as well as paying $1,500 in duplicative fees. Consulting firm A.T. Kearney found in its detailed findings that through 2020, the financial services industry is expected to lose $20 billion as a result of the fiduciary rule.

The DOL puts the costs at a lower rate than the AAF does, and the Left-leaning Economic Policy Institute concurs in detail with the DOL's analysis. In its regulatory analysis of the fiduciary rule, the DOL estimates that the fiduciary rule could cost anywhere between $10 billion and $31.5 billion over the next decade (DOL, p. 10). The DOL also estimates that investors would stand to make $33 billion to $36 billion in gains over the next decade (ibid.), although interestingly enough, the centrist Brookings Institution puts it at $108 billion.

The fiduciary rule has the potential to limit investment advice for those with lower retirement accounts. The Cass Business School found that when the British government passed a comparable version of the DOL's fiduciary rule, it resulted in advisors largely abandoning those with savings below $220,000. As a result of Britain's equivalent of the fiduciary rule, the U.K. Financial Conduct Authority found that the number of firms asking for a £100,000 minimum more than doubled [from 13 percent to 32 percent] (FCA, p. 19). To bring the accessibility issue back to the United States, consulting firm Oliver Wyman estimates that 7 million IRA accounts would fail to qualify for an advisory account under the new fiduciary rule because the balance will be too low.

Even for those who view the DOL fiduciary rule as a positive step, such as those over at the Brookings Institution (Bailey and Holmes, 2015), there is still concern that the rise in compliance costs could mean abandoning clients with small-scale savings. There are technically alternative ways of paying for financial advice that do not create obvious conflict of interest. However, brokers will not be able to find a way to provide cost-effective advice to less wealthy investors. How so? Brokers who use the commission structure will find it too expensive under the new DOL rule (not to mention that a commission structure would be rendered inherently conflicted under the new law), and a flat fee is inefficient for smaller investors, which account for up to 76 percent of IRA investors. A study from McKinsey shows that advisors earn 0.54 percent on commission-based accounts while earning 1.18 percent on fee-based accounts. What the McKinsey finding means is that the average account would be hit with an extra $800 cost year, which would be unaffordable for many.

Another cost that is up for debate is that of litigation costs. If the fiduciary inadvertently provides bad advice or the client selects safer portfolio options (thereby yielding a smaller rate of return), it could open up lawsuits. The DOL estimates that it would increase premiums by 10 percent, or $300 a year. However, an independent analysis from Oxford Economics begs to differ. The issue with putting a number on the litigation costs is that the unknown nature of the effects the fiduciary status will have. Oxford Economics not only believes that the DOL is wildly underestimating, but that the fiduciary rule would complicate compliance and litigation risks (Oxford, p. 11, 19-20). In 2016, there were 4,000 arbitration cases alleging wrongdoing by a broker. With elevating brokers to the legal status of fiduciary, it is not unfeasible to think that litigation costs would skyrocket.

Even in spite of the fees, I think another important question we should ask ourselves is whether enough Americans are able to save for retirement with the status quo. This is not to justify the morality of the financial professionals that do take advantage of others, but to ask whether the American people are left with nothing to save as a result of swindlers. I took a look at 401(k) retirement accounts earlier this year, which can provide some insight. To summarize, we're not in a retirement crisis. We've had more people save for retirement as a result of the 401(k). 75 to 85 percent of those who save with a 401(k) have enough for retirement. What is more is that since 1989, retirement savings have been exceeding inflation. The 401(k) is not perfect, and financial professionals could perhaps give better advice to help their clients. However, the situation is not so dire where financial advisors are robbing their clients blind while leaving them with nothing to live off: far from it.

Financial services companies have already reacted to the fiduciary rule. MetLife and AIG have already left the brokerage market all together. Merrill Lynch replaced its commission-based retirement accounts with a fee-based model, which could end up costing more. State Farm and Morgan Stanley have already drawn back on its brokerage business in anticipation of the fiduciary rule. And to think that these are the big firms. Much like Dodd-Frank disproportionately affects smaller banks because it was more difficult to gather the resources to fully comply with all the regulations (see GAO report), I would expect smaller financial advisors to have a similar issues, especially a similar trend in smaller firms leaving and the subsequent market consolidation that we observed in the banking sector with the enactment of Dodd-Frank (see Fed data here).

In many ways, the fiduciary rule is "Obamacare for your IRA," especially that bit of "if you like your plan, you can keep it." If the 401(k) provides for more-than-adequate retirement savings, then a fiduciary rule that forces many advisors towards fee-based could make it more difficult to invest in retirement, thereby exacerbating income inequality. Costing both the financial advisors and investors is not protecting people, but pricing many out of saving for retirement. If more tax-advantaged vehicles are abandoned, especially those for lower-income individuals, it would probably mean greater reliance on Social Security, which would be deleterious given how strained Social Security already is. A simple disclosure rule explaining the compensation structure to their advisees could very well do the trick. What will not do the trick is the fiduciary rule. Once it goes into effect, it will not be at all surprising if or when we see saving for retirement become all the more elusive and unreachable for the average American because some bureaucratic entity that doesn't have much experience in financial regulation unleashed feel-good policy with bad results.

The Easter Story: The Greatest Myth Ever Told

We’ve all heard the story. Jesus is resurrected from the dead three days after his crucifixion. His “miraculous recovery” is supposed to prove that his death that he died to save mankind, or at least Christendom, from their sins.

I call the Easter story the greatest myth ever told, well, because it is. The story is great because of the impact it has had on this world, for better or worse. I call it a myth because, as I detail below, this story is inconceivable.

I am certain that this blog entry will not be palatable to any Christian who reads it. To be perfectly frank, that is not my issue, even if you happen to be one of my many Christian friends. Ascertaining truth in this world is of utmost importance to me [and I hope you understand that], which is why such stories need to be classified and recognized for the untruths they are.

Although Christian apologists would claim that there is ample historical evidence proving Jesus’ resurrection, historicity has another tale to tell. When performing historical analysis, we look for the historical evidence to corroborate or negate its veracity. Unlike other historical events, we have no evidence whatsoever of a resurrection, not even a single eyewitness testimony!  The only sources we have around that time period documenting this event are sacred scriptures of a pro-Christian bent.  So, in terms of historical veracity, the evidence we have is of the least objective kind—nothing more than the word of a bunch of biased, unscholarly devotees of Jesus who would have said anything because their devotion to Jesus had been set in stone long before his death. Even if we were to believe Paul when he said that there were over five hundred witnesses to the resurrection (1 Corinthians 15:6), we run into a problem. Why didn’t Paul tell us who these witnesses were or where they lived? Why is there no eyewitness testimony from them?  Hypothetically, I can claim that five hundred people saw me make a five-story building disappear. Aside from the initial ridiculousness of the claim, wouldn’t it be all the more embarrassing if I couldn’t produce any eyewitness testimony to my supposed miracle?

If I were an objective historian, I would not use Christian scriptures as my sole basis for proving anything since one can hardly consider such a text to be unbiased. Since Christian scriptures are the only “evidence” for such an event, one would also have to consider that other scenarios were just as plausible. This is precisely what Yisroel Blumenthal does--create reasonable doubt.  One scenario is that Jesus’ followers were in a hurry to bury Jesus [since it was almost the Sabbath], and because they were in a rush, they could have forgotten the location of the burial site. Another possibility is that the disciples, in their zealousness, removed the body themselves and lied to the masses in order to perpetuate the worship of Jesus the man. A third possibility is that Jesus’ body was indeed exhumed by the governing authorities to be put on display to prove that Jesus was never resurrected, but what makes you think that such evidence would have survived centuries of the Catholic Church’s censorship?

But let us put aside notions about eyewitness testimony, reasonable doubt, and corroborating evidence for a moment. After all, Christians tell us we should believe because the Bible tells us so. Just for the record, they’ll also have you believe that the Bible is true because the Bible is true—you have to love that circular argumentation! For argument’s sake, what I will do is temporarily suspend my disbelief by taking Christian scriptures at face value and presume that they were written by well-intentioned men whose goal was to genially “bring the [true] word of Christ to the world.”

When looking at what Christian scriptures has to say about the alleged event, even an unbiased reader has to question the veracity of such a source due to multiple textual issues and inconsistencies. Just to name a few:

1) On which day was Jesus crucified? Some sources say the day before Passover (John 13:1, 29, 18:28, 19:14), whereas others say the first day of Passover (Mark 14:17-25, Luke 22:14-23, Matthew 26:20-30). This causes an even more complicated discrepancy since right before Jesus’ death, he had a Passover seder. There is no way that the seder would have occurred before Passover began, which means that his death could not have either.

2) What were Jesus’ last words? Luke 23:46 says they were “Father, into Your hands I commit my spirit.” John 19:30 says “It is finished.” Mark 15:34 and Matthew 27:46 both say that they were “Eloi, Eloi, lama sabachthani, which is translated ‘My G-d, My G-d, why have you forsaken me?’” The latter is perturbing since those last words sound more like a man who questions why G-d has abandoned him more than anything else.

3) How many days was Jesus in his tomb? Jesus prophesized (Matthew 12:40) that it would be three days and three nights, the same time that Jonah was in the belly of the whale. John 20:1 said it was two days and two nights, whereas Mark 16:2, Luke 24:1, and Matthew 28:1 say it was three days and two nights. Aside from the contradictions between the Gospels, what is even more glaring is that in either case, his stay in the earth did not last for three days and three nights, thereby making him a false prophet.

4) On the Sunday morning, how many people initially approached the empty tomb? This is another one of those “depends on who you ask” questions. John (20:1) says one, Mark (16:1) says three, and Luke (24:10) says four.

5) After seeing the angels, whom did Mary meet first? According to Luke (24:4-10), it was the disciples. John (20:14), Mark (16:9), and Matthew (28:9) all say that she first met Jesus.

6) Did those who were allegedly there doubt that it was Jesus? Answer: Yes! Mary thought it was the gardener (John: 20:14-15). Even some of Jesus’ disciples were unsure that it was actually Jesus (Matthew 28:17).

7) Where did Jesus' post-resurrection appearances take place?  Luke (24:13-53) said they were near Jerusalem, whereas Matthew (28:7-20) said they were near the Galilee, which is in the northern part of Israel.

8) When did the apostles receive the "holy spirit?"  According to John (20:22), it was on Easter Sunday, whereas Luke (Acts 1:5, 8, 2:1-4) insists that it was on Pentecost, which was fifty days later!

I can come up with about twenty other inconsistencies in no time flat, but I'll leave the rest to Rabbi Tovia Singer, who has done what any unbiased reader of the text would do. He has lined up the four versions of the resurrection story here and shows that none of the details in the four accounts are consistent with each other. In case anybody is doubting me, I did verify the citations' veracity, which means that the existence of the inconsistencies is not up for debate. If any other text, religious or secular, had such glaring inconsistencies, I wouldn’t expect Christians to ardently defend it with the [theological] acrobatics that they defend their scriptures.

To say the least, this causes many problems for Christian apologists. In the words of Asher Norman, author of 26 Reasons Why Jews Don’t Believe in Jesus, he ever so eloquently states, on page 274 of his book, the blatant issues with the conflicting eyewitness testimonies:

Missionaries explain these conflicts to be like differences in eyewitness testimony of an event. They assert that conflicts are expected and actually prove the veracity of the witnesses because false witnesses would rehearse their stories. There are three problems with the missionary answer. First, the Gospel writers were not eyewitnesses. None of them are reported to have witnessed the events described above. Second, many of the differences concern times, dates, and places, which cannot be explained away by differences in perspective. Third, the testimony of the authors is supposedly “the inspired word of G-d (2 Timothy 3:16).” Would G-d transmit a garbled version of the story that is the foundation of Christian faith? Since the “resurrection” of a dead body is not scientifically possible, one needs to believe in a miracle to accept the story as true. Since the contradictions prove that G-d did not inspire the text, there is no rational reason to believe in the “resurrection.” It is therefore simply a self-serving explanation to explain the death of a failed messiah.

Conclusion: I find that the inaccuracies this story epitomize my theological frustrations with Christianity, and calling them "frustrations" would be me putting it mildly. After all, this story is unquestionably the cornerstone of Christianity. Without it, there would be no Christianity. This is why an honest, thorough analysis of the text is essential.

I hope I'm not asking for too much here, but I’ll give it a go. What I ask of Christians is that the minimalist standards that you use to prove veracity are those that you would use in any other decision or analysis you make in your daily lives. The very fact that a significantly lower burden of proof is used in Christianity is regrettable, especially from my conservative Christian friends who constantly complain, and accurately so, about the political Left and their usage of double standards.

I’d also like to make another essential point. Even if this “resurrection” ever happened, I would still find it to be a moot point because, as I blogged a couple of months ago, Jesus could not have possibly died for our sins.

This is not to say that I don't think Christians have a right to practice their religion in America.  If Christianity makes you feel happy and it helps you to be a contributing member of society, go for it!  As long as your faith does not interfere with anybody else's right to practice their religion, I will respect your right to practice Christianity. However, I hope that for any Christian who takes their faith seriously, I hope you take my legitimate concerns just as seriously and think about these inconsistencies.