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 were the results of the Dodd-Frank Act? ›
The most far reaching Wall Street reform in history, Dodd-Frank will prevent the excessive risk-taking that led to the financial crisis. The law also provides common-sense protections for American families, creating new consumer watchdog to prevent mortgage companies and pay-day lenders from exploiting consumers.
What is one of the concerns of critics opposed to the Dodd-Frank Act? ›
What is one of the concerns of critics opposed to the Dodd-Frank Act? The provisions of the act are not specific enough. The provisions of the act are voluntary. It will be too costly for accounting firms.
What is too big to fail Dodd-Frank Act? ›
'” The Dodd-Frank Act attempts to address “too big to fail” by expanding the regulatory reach to non-bank systemically-important institutions, by creating an “orderly liquidation authority,” and by limiting the authority of regulatory bodies that give loans to failing banks.
Is Dodd-Frank still effective? ›
Some experts have argued that Dodd–Frank does not protect consumers adequately and does not end too big to fail. Research also finds that Dodd–Frank's increased regulation of credit rating agencies negatively impacted financing and investment of firms worried about their credit ratings.
What are the negative effects of the Dodd-Frank Act? ›
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 is an example of a violation of the Dodd-Frank Act? ›
Violations of the FCRA may also be considered as a FTC UDAP or Dodd- Frank UDAAP. For example, obtaining and using unsolicited medical information (outside of the exceptions provided by the rule) to make credit decisions may also be considered as unfair.
How has Dodd-Frank impacted banks? ›
The law exempted lenders with assets of less than $10 billion from requirements of the Volcker Rule and imposed less stringent reporting and capital norms on small lenders. It required that the three major credit reporting agencies allow consumers to freeze their credit files free of charge as a way of deterring fraud.
What is the Dodd-Frank systemic risk? ›
The Dodd-Frank Act enhanced systemic risk monitoring by creating new entities tasked with identifying emerging threats to financial stability and reducing opacity in financial markets so regulators and the public could better identify and understand emerging threats.
What is the Dodd-Frank penalty? ›
Specifically, the Dodd-Frank Act initially provided for the following tiers of civil money penalties: For any violation of a law, rule, or final order or condition imposed in writing by the CFPB, a civil money penalty of up to $5,000 for each day during which such violation or failure to pay continues.
Definitions. Unfair Acts or Practices - The Dodd-Frank Act standard for unfairness is that an act or practice is unfair when: It causes or is likely to cause substantial injury to consumers; The injury is not reasonably avoidable by consumers; and.
What is the Dodd-Frank Act risk retention? ›
The Dodd-Frank Act requires securitization sponsors to retain not less than a 5% share of the aggregate credit risk of the assets they securitize.
What is Dodd-Frank's law for dummies? ›
The Dodd-Frank Act, officially called the Dodd-Frank Wall Street Reform and Consumer Protection Act, is a federal law that was passed by Congress on July 21, 2010. One purpose of the law is to promote the financial stability of the United States by improving accountability and transparency in the financial system.
What is the Dodd-Frank financial stability? ›
The Financial Stability Oversight Council (FSOC) was established on July 21, 2010 by Public Law 111-203 (Dodd-Frank Wall Street Reform and Consumer Protection Act). The Council was created to provide collective accountability for identifying risks and responding to emerging threats to financial stability.
What are the core principles of the Dodd-Frank Act? ›
Its provisions restricted banks from trading with their own funds (the “Volcker Rule”), heightened monitoring of systemic risk, tightened regulation of financial products, and introduced consumer protection initiatives.
What changes did the Dodd-Frank Act make to the Fed? ›
The Dodd-Frank Act modified the Federal Reserve's authority to provide emergency liquidity to nondepository institutions under section 13(3) of the Federal Reserve Act in light of other amendments that provide the U.S. government with new authority to resolve failing, systemically important nonbank financial ...
What was established in 2010 as a result of the Dodd-Frank Act? ›
The Consumer Financial Protection Bureau (CFPB) was established in 2010 as a result of the Dodd-Frank Act. This act was a significant reform in the financial sector, initiated in response to the financial crisis of 2008 and the subsequent Great Recession.
Which of the following did the Dodd-Frank Act accomplish quizlet? ›
The Dodd Frank Act loosens regulations for banks. Dodd-Frank was an attempt to regain control of the financial institutions industry by the federal government. The major pieces of Dodd-Frank were the creation of the Financial Stability Oversight Council to monitor how systematic risk could impact the industry.
