Legislative Update: Reforming Dodd-Frank
By The Policy Circle Team
On February 3, 2017 President Trump signed an executive order directing federal agencies to review financial regulations instituted under the Obama administration. While the new executive order does not explicitly mention Dodd-Frank, it does direct the secretary of the Treasury to identify any regulations that “inhibit Federal regulation of the United States financial system in a manner consistent” with the principles outlined. President Trump has mentioned his desire to roll back Dodd-Frank.
Dodd-Frank Legislation
Introduced by Senator Christopher Dodd (D-CT, retired) and Congressman Barney Frank (D-MA, retired), the legislation was meant to fix the “too big to fail” problem that led to the taxpayer bailout of Wall Street banks and to protect consumers by heavily policing financial products. But Dodd-Frank actually created a stable class of too-big-to-fail institutions and its onerous regulations have negatively impacted smaller community banks’ ability to lend to small businesses. 63.3% of jobs are created by small businesses in our communities. If small businesses don’t have access to capital they cannot invest in developing their workforce, they cannot take the risks to innovate, and they cannot grow and hire more people.
The Policy Circle’s new brief, Legislation to Watch: Dodd-Frank, looks at this bill that has changed how our banking industry operates as a result of the 2008 economic recession precipitated by the housing crisis.
The House Financial Services Committee Chairman Jeb Hensarling is calling for a reform of Dodd-Frank. American Enterprise scholar Peter Wallison also makes the case in his Wall Street Journal op-ed that “thoroughgoing reform of that destructive law is certainly a key step toward an economic recovery,” calling Dodd-Frank “the most restrictive financial legislation since the New Deal.”
National Review‘s recent article, “Fixing Finance, Still: Replace Dodd-Frank with Something that Will Work,” explores from both a policy and practical standpoint the flaws and government overreach inherent in Dodd-Frank.
For more on the housing crisis, the resulting Dodd-Frank legislation and topics under discussion related to its reform, click here to read the new Policy Circle Brief for more detail.
Has your community bank or local financial services firm been affected by Dodd-Frank? If you don’t know, ask.
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