On July 21, 2010, President Barack Obama signed the Dodd–Frank Wall Street Reform and Consumer Protection Act into law. The legislation, written by Congressman Barney Frank, and Chairman of the Senate Banking Committee Chris Dodd, promised to be the most comprehensive financial reform to be undertaken since the Great Depression. As with the Glass-Steagall Act, which was passed in 1933, in the wake of our last Wall Street-initiated financial collapse, we were told this would set things straight, making such abuses impossible in the future. (The Glass-Steagall Act, it’s worth noting, had been systematically dismantled starting in the 1980′s. All of the Act’s remaining elements were effectively repealed in 1999, with the passage of the Graham-Leach-Bliley Act, or, as it’s commonly known, the Financial Services Modernization Act.) Upon signing the Dodd Frank Act into law, President Obama said the following, to great applause:
Passing this bill was no easy task. To get there, we had to overcome the furious lobbying of an array of powerful interest groups and a partisan minority determined to block change. So the members who are here today, both on the stage and in the audience, they have done a great service in devoting so much time and expertise to this effort, to looking out for the public interests and not the special interests. And I also want to thank the three Republican senators who put partisanship aside judged this bill on the merits, and voted for reform. We’re grateful to them. And the Republican House members…
Now, let’s put this in perspective. The fact is, the financial industry is central to our nation’s ability to grow, to prosper, to compete and to innovate. There are a lot of banks that understand and fulfill this vital role, and there are a whole lot of bankers who want to do right — and do right — by their customers. This reform will help foster innovation, not hamper it. It is designed to make sure that everybody follows the same set of rules, so that firms compete on price and quality, not on tricks and not on traps.
It demands accountability and responsibility from everyone. It provides certainty to everybody, from bankers to farmers to business owners to consumers. And unless your business model depends on cutting corners or bilking your customers, you’ve got nothing to fear from reform…
With this law, we’ll crack down on abusive practices in the mortgage industry. We’ll make sure that contracts are simpler -– putting an end to many hidden penalties and fees in complex mortgages -– so folks know what they’re signing.
With this law, students who take out college loans will be provided clear and concise information about their obligations. And with this law, ordinary investors -– like seniors and folks saving for retirement –- will be able to receive more information about the costs and risks of mutual funds and other investment products, so that they can make better financial decisions as to what will work for them.
So, all told, these reforms represent the strongest consumer financial protections in history… In history… And these protections will be enforced by a new consumer watchdog with just one job: looking out for people -– not big banks, not lenders, not investment houses -– looking out for people as they interact with the financial system.
Sounds great, right? New laws to protect consumers from abuse. A new consumer watchdog agency… Like the President said, the only reason anyone would be against this particular piece of legislation would be if their business model depended on cutting corners and bilking customers… Well, guess what?
In the year and a half since passing, almost nothing stipulated in the Act has come to pass. And, given the way things are going, it’s doubtful that most of it ever will, with Republicans in Congress fighting it tooth and nail on behalf of their corporate benefactors. Here’s a clip from a recent article in Politico.
…(F)ederal agencies have blown about 77 percent of the rule-making deadlines for the massive overhaul, according to a recent progress report by the law firm Davis Polk — meaning key parts of the bill are far from implementation.
Some Democratic officials see a Republican plot afoot to run out the clock, in hopes that a GOP-controlled Senate and White House can overturn the reforms. But one top Treasury official said the missed deadlines are less of a concern to the administration than the possibility that a rushed process would result in poor regulations.
“We want quality and speed, but we’re not going to sacrifice quality for speed,” Deputy Treasury Secretary Neal Wolin told POLITICO. “We want to make sure that we do these rules in a thorough way.”
In some cases, Wolin said, politics are slowing down the process. Senate Republicans are blocking the nomination of Richard Cordray to head the new Consumer Financial Protection Bureau unless changes in governance are made to the agency. GOP lawmakers also have introduced bills to repeal all or part of the 848-page Dodd-Frank law…
And this, as you’ll recall, comes after Republicans successfully forced Elizabeth Warren from the newly formed Consumer Financial Protection Bureau. Now, they’ve turned their attention toward her successor, and they’re demanding that control over the new entity ultimately reside with individuals who, in some way, are beholden to the financial industry.
The eight Republicans currently running for their party’s presidential nomination have all come out against the Dodd Frank Act. As Ezra Klein just pointed out the other day in the Washington Post, though, they’re reluctant to say why. When pushed, they’ll mention that it’s bad for small banks. That, apparently, isn’t true, though. Here’s a clip from Klein’s article.
The 2012 Republican field hates Dodd-Frank. But when asked what they particularly detest about Obama’s Wall Street bill, the candidates don’t tend to get very specific. They blast Dodd-Frank for killing the economy through regulations and attack the Democratic authors of the legislation.
“If you want to put people in jail, I want to second what Michele (Bachmann) said, you ought to start with Barney Frank and Chris Dodd,” Newt Gingrich said during a debate last month.
What they don’t usually do is delve into detailed explanations of what’s wrong with the legislation. But there’s at least one concrete criticism that they bring up, time and again: that Dodd-Frank is “a killer for the small banks,” as Mitt Romney pronounced at another debate last month—a claim that both Gingrich and Herman Cain repeated in Detroit last night.
But despite the GOP field’s comments, small and community banks aren’t uniformly, unequivocally opposed to Obama’s Wall Street reform. In fact, even the country’s biggest lobbying group for community banks praises Dodd-Frank for helping to level the playing field by reining in big banks, while also criticizing specific provisions of the legislation…
I’d like to go on a rant, but this piece by John Oliver, from a few months ago on the Daily Show, does a much better job than I could ever hope to. If the subject matter weren’t so depressing, it would be absolutely hilarious… For those of you who have never seen the piece, Oliver, dressed like the Bill from Shoolhouse Rock, satirizes the beloved 70′s cartoon, substituting in new language about how politicians go about making legislation impotent after its passage. “Here’s what’s going down,” says Oliver at the end of the bit, “The whole financial reform thing is a sham. The only way that Congress would pass me is if the details of my rules and regulations were left unspecified, giving K Street lobbyists all the time that they’d need to water me down post-passage… And if any actual tough reform managed to squeak through, Congresspeople cut the budget of the agency responsible for enforcing it.” Here it is: