The Failures of Dodd-Frank

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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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