Dodd-Frank Starves Congo; Advocates Win

by Chidem Kurdas

While I decided the financial regulation act Dodd-Frank is a gigantic dud after scanning its thousands of pages, I missed the bit on Congo that David Aronson brought to light in a NYT op-ed column this Monday.

Activist-lobbyists apparently inserted into the act a requirement that public companies buying minerals from Congo show how they prevent their purchases from benefiting warlords. Predictably, the companies did not want to risk being accused of financing bloodshed and simply switched to alternative mineral sources. Congolese who worked in mining lost that income and are now starting to go hungry.

This is from Aronson, who finds that the Congo provision in Dodd-Frank is a disaster for Congo—a place that has enough suffering as is.

But for the activists it is an achievement that can be used in raising money as they hobnob with celebrities. Enterprising and connected, they have done well for themselves. One of them, John Prendergast of Enough Project, testified on Congo to the House Foreign Relations Committee in March, together with actor Ben Affleck.

At this hearing, “No Congolese, African or even African American person testified,” says a report.

Aronson quotes a Congolese, who asked: “If the advocacy groups aren’t speaking for the people of eastern Congo, whom are they speaking for?”

The answer is that they are in effect speaking and working for themselves. Advocate-lobbyists of course claim that their policy agenda is to help other people. The policies may or may not have that effect, while almost certainly helping the activists themselves. This is not to deny that individuals can do things out of altruistic concern. But reordering other people’s lives and economies is as likely to make them worse off.

To know what will make Congolese better off, you have to ask the Congolese. They can’t have wanted the destruction of part of their mining industry and the livelihoods that depended on it.

On this score, Dodd-Frank is more than a dud—-it is an outrage.

3 thoughts on “Dodd-Frank Starves Congo; Advocates Win

  1. Yes, an outrage on all accounts. There is an article in today’s WSJ on a Texas bank that is turning in its bank charter because it can’t afford the regulatory burden of DFA. It will continue in much the same business, operating as a nonbank lender.

    Last March, a regulator involved in writing the rules warned me that lots of small banks would cease business under the act’s regulatory burden.

    Meanwhile, the incentives for risk taking by large banks, and all the other factors that created the financial crisis go unadressed.

  2. Jerry-
    The impact on small banks is an important issue. Lip service is always paid to not harming small businesses but then the reality is different, as your examples show.

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