Weighing in at 2,300 pages and adding 400 new regulatory burdens on our economy, the Dodd-Frank Act signed into law by President Obama in 2010 is the most sweeping rewrite of our financial laws since the New Deal. Its proponents promised that Dodd-Frank would “lift our economy, end “Too Big to Fail” and “promote financial stability.” It failed.
Since the passage of Dodd-Frank, the big banks are bigger and the small banks are fewer. Today there are fewer community banks and credit unions serving the needs of small businesses and families.
Dodd-Frank enshrines “Too Big to Fail” into law. It gives Washington bureaucrats the power to officially designate large financial firms “Too Big to Fail” and then makes them eligible for taxpayer-funded bailouts.
Under the Obama economic strategy of which Dodd-Frank is a central pillar, Americans are suffering through the weakest performing recovery of our lifetimes. The share of able-bodied Americans in the labor force has hovered at the lowest level in nearly 40 years. Small business startups are at the lowest level in a generation.
The harm to consumers is very, very real.
It is now harder for credit-worthy Americans to buy a home. In fact, one out of five who borrowed to buy a home in 2010 will not meet the underwriting requirements of Dodd-Frank’s mortgage rules. According to the Federal Reserve, that’ll hit roughly one-third of Hispanic and African-American borrowers.
Services that we once took for granted – like free checking – are being curtailed or eliminated because of Dodd-Frank. Before, 75 percent of banks offered free checking. Just two years after Dodd-Frank became law that number was cut almost in half.
Bank fees have also increased due to Dodd-Frank’s costs. This has led to a rise in the number of low and moderate income Americans who simply can’t afford to maintain a checking or savings account.
House Republicans offered the Consumer Protection and Regulatory Enhancement Act as an alternative to Dodd-Frank. It sought to restore market discipline, end taxpayer bailouts and protect consumers with innovative, competitive markets policed for fraud and deception. It’s time to revisit the ideas in that bill, offer new ones and replace Dodd-Frank.
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FAQs
Since the passage of Dodd-Frank, the big banks are bigger and the small banks are fewer. Today there are fewer community banks and credit unions serving the needs of small businesses and families. Dodd-Frank enshrines “Too Big to Fail” into law.
What was the result of Dodd-Frank? ›
President Obama's Wall Street reform law created an independent agency to set and enforce clear, consistent rules for the financial marketplace. The Consumer Financial Protection Bureau (CFPB) is setting clear rules of the road and will ensure that financial firms are held to high standards.
What is a criticism of the Dodd-Frank Act? ›
Critics of the law argue that the regulatory burdens it imposes could make U.S. firms less competitive than their foreign counterparts. 2. In 2018, Congress passed a new law that rolled back some of Dodd-Frank's restrictions.
What was the Dodd-Frank decision? ›
Dodd–Frank reorganized the financial regulatory system, eliminating the Office of Thrift Supervision, assigning new jobs to existing agencies similar to the Federal Deposit Insurance Corporation, and creating new agencies like the Consumer Financial Protection Bureau (CFPB).
What is one of the issues addressed by the Dodd-Frank Act? ›
The financial crisis that swept the world in 2008 required massive bank bailouts to avoid an even deeper economic collapse. In 2010, U.S. lawmakers passed the Dodd-Frank Act, which sought to reduce risk in the banking system.
What bill weakened Dodd-Frank? ›
The Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) would undo many of the safeguards put in place under Dodd-Frank, threatening to once again leave Main Street on the hook for poor decisions on Wall Street.
What is the most controversial Dodd-Frank regulation? ›
The Volcker Rule (§ 619 of the Dodd-Frank Act), is one of the most controversial and sweeping provisions of the Act.
Has Dodd-Frank affected bank expenses? ›
The Dodd-Frank act roughly doubled the number of regulations applied to U.S. banks, which increased their compliance costs by more than $50 billion per year. Banks experienced a one-time increase in non-salary expenses, while their salary expenses increased in proportion to new regulations.
What are the core principles of the Dodd-Frank Act? ›
Simple principles like. . . . Markets should be transparent. Regulation should be consistent, without gaps that can be exploited by those who wish to indulge in risky, destabilizing or illegal behavior. Market participants, not taxpayers, should bear the risks of their market activities.
What did the Dodd-Frank Act do in the aftermath of the 2008 financial crisis? ›
In the aftermath of the 2008 financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) enhanced the CFTC's regulatory authority to oversee the more than $400 trillion swaps market.
The Dodd-Frank Act included legislative changes designed to promote transparency while protecting monetary policy independence and the efficacy of the Federal Reserve's liquidity programs and OMOs.
What changes did the Dodd-Frank Act make to the Fed? ›
Its actions include regulating banks and protecting consumers from predatory and unfair practices. Dodd-Frank established two new agencies: the Financial Stability Oversight Counsel and the Consumer Financial Protection Bureau. Both enforce rules and protect consumers.
What is Dodd-Frank whistleblower? ›
The Commission's whistleblower program was created by the Dodd-Frank Act, and it provides monetary awards to persons who voluntarily report violations of the Commodity Exchange Act (CEA) if the information leads the Commission to bring an action, or if the information significantly contributes to the success of a ...
What is the main focus of the Dodd-Frank Act quizlet? ›
To protect consumers from abusive financial services practices.
What did Dodd-Frank Wall Street Reform and Consumer Protection Act do? ›
Enforces Regulations on the Books: Strengthens oversight and empowers regulators to aggressively pursue financial fraud, conflicts of interest and manipulation of the system that benefits special interests at the expense of American families and businesses.
