Sunday, May 26, 2024
Hawai'i Free Press

Current Articles | Archives

Friday, July 20, 2012
Dodd-Frank Financial Regulations Strangling Economy
By Heritage Foundation @ 2:15 PM :: 4644 Views :: National News, Ethics

Dodd-Frank Financial Regulations Strangling Economy

www.Heritage.org

Has your bank raised its fees or stopped offering free checking accounts in the last couple of years? If so, you can thank the regulatory boondoggle that is the Dodd-Frank financial law.

Since its passage two years ago tomorrow, the number of large banks that offer free checking has declined sharply. In 2009, 96 percent of them offered free checking, but just 34.6 percent did in 2011.

Senator Chris Dodd (D-CT) and Representative Barney Frank (D-MA) argued that their namesake would save America from another financial crisis—but most of the law's provisions have little or no connection to the most recent crisis.

For example, Dodd–Frank does not end bailouts and taxpayer support for big banks. Under the act, the Federal Deposit Insurance Corporation (FDIC) is permitted to purchase the assets of a failing firm, guarantee the obligations of a failing firm, take a security interest in the assets of a failing firm, and borrow on the failed firm's total consolidated assets. (For Bank of America, that would be $2 trillion in bailout authority to be paid by taxpayers.)

Congress has proven, in fact, that it grossly misdiagnosed the factors responsible for the financial crisis, while ignoring primary culprits such as Fannie Mae and Freddie Mac. But in its haste to appear relevant and on top of things, Congress has unleashed a staggering amount of new regulations that are actually harming—not helping—the economy.

There's a reason the financial regulation law has been called "Dodd-Frankenstein." This monstrous creation will swell the ranks of regulators by 2,849 new positions, according to the Government Accountability Office. It created yet another new bureaucracy called the Consumer Financial Protection Bureau (CFPB) that has truly unparalleled powers.

This new bureau is supposed to regulate credit and debit cards, mortgages, student loans, savings and checking accounts, and most every other consumer financial product and service. And it's not even subject to congressional oversight.

Frighteningly, the CFPB's regulatory authority is just as vague as it is vast. More than half of the regulatory provisions in Dodd–Frank state that agencies "may" issue rules or shall issue rules as they "determine are necessary and appropriate." This means, as The Economist put it, "Like the Hydra of Greek myth, Dodd-Frank can grow new heads as needed."

Congress avoided making real law here and passed the responsibility for "fixing" the financial sector to these newly minted bureaucrats. And that hasn't been going too well.

As Heritage's Diane Katz explains in a two-year checkup of the law:

As of July 2, 63 percent of the deadlines have been missed, which has intensified the cloud of uncertainty enveloping the finance sector—and the economy—since passage of the act. Thousands of businesses do not know what the government demands they do differently or when they must do it.

The results of this haphazard regulation are dire, Katz says, because "consumers will experience tight credit, higher fees, and fewer service innovations. Job creation will suffer." She adds that "financial firms of all sizes are shelling out hundreds of millions of dollars for regulatory compliance officers and attorneys rather than making loans for new homes and businesses."

So the law that was supposed to fix the financial sector—and created something called the Consumer Financial Protection Bureau—is hurting consumers rather than "protecting" them. Congress should repeal Dodd-Frank before it can do any more damage.

---30---

See our Dodd-Frank Fact Sheet

Special Note: The thoughts and prayers of The Heritage Foundation are with the victims, families and people of Aurora, Colorado this morning following last night's senseless tragedy. May God bless them.

FEATURED POSTS

QUICK HITS

  • The AP reports that "A gunman wearing a gas mask set off an unknown gas and fired into a crowded movie theater in suburban Denver theater at a midnight opening of the Batman movie 'The Dark Knight Rises,'" killing at least 12 people and injuring others.
  • President Obama's campaign launched an ad claiming that he did not say "If you've got a business, you didn't build that"—even though the ad includes a clip of his saying that.
  • When asked why his party didn't push through tax increases when it had a majority in both houses of Congress, Senate Majority Leader Harry Reid (D-NV) said, "Next question."
  • Tens of thousands of protestors joined union-organized protests in Spain after pay cuts for government workers were announced.
  • How will families pay for the harmful Taxmageddon tax increases coming in January? Check out our breakdown of how far $4,000 goes for families.
Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii Military History

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Together

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

July 4 in Hawaii

Land and Power in Hawaii

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

MentalIllnessPolicy.org

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Parents Org Hawaii

NFIB Hawaii News

NRA-ILA Hawaii

Obookiah

OHA Lies

Opt Out Today

Patients Rights Council Hawaii

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

RailRipoff.com

Rental by Owner Awareness Assn

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

School Choice in Hawaii

SenatorFong.com

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii