Rand Paul: Banking Collapse Was Caused By Too Much Regulation

On the Daily Show Monday night, Sen. Rand Paul (R-KY) blamed the government for mucking up capitalism, saying that the banking collapse was caused not by too little government regulation of the financial sector, but by too much meddling by the Federal Reserve.

By arbitrarily setting interest rates rather than letting those rates be determined by the free market, the Fed created an unsustainable financial structure, Paul said.

“I don’t say that’s a failure of capitalism,” Paul said. “That’s a failure of a central bank getting involved and messing up capitalism.”

“We need less of the government manipulating interest rates,” he later added. “So it really depends on which way you’re gonna go. Did capitalism fail, or did central banking fail?”

Stewart started the interview off by praising Paul for being the “walkiest of the talkers” for his willingness to call for spending cuts across the board, including cuts to entitlement programs and defense spending. But when the talk turned to federal regulation of business, Stewart was unconvinced by Paul’s argument on how limited the government’s reach should be.

“Doesn’t the government have a role though, in keeping business practices honest,” Stewart asked. “Would our food be as healthy and clean as it is if we hadn’t have had the Pure Food [and Drug] Act or the FDA?”

Paul then began to argue that things aren’t actually so bad, and that the government is overstating the problems it must regulate.

“We need to acknowledge that the air is actually much cleaner than it was 30 years ago,” Paul said.

“But that’s the Clean Air Act,” Stewart shot back.

Throughout the nearly 20 minute-long interview, which waxed wonky at times, Paul repeated his argument that a more limited government, coupled with lower taxes are necessary to spur economic growth and balance the budget.

Watch the video below:

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Part 3: