Why Killing Dodd-Frank Could Lead to the Next Crash
July 8, 2018
In the age of Trump, bipartisanship is considered a sin. So one would think that when Republicans and Democrats do pass a law together, it’d be for something so popular, it couldn’t be questioned politically: a nonbinding resolution on the cuteness of puppies, maybe, or a national ice cream giveaway.
Nope. The rare bipartisan bill turned out to be a rollback of the Dodd-Frank financial-reform act. More than 80 percent of Democrats and two-thirds of Republicans want tougher rules on banks. Yet this was our Trump-era kumbaya moment: a bank deregulation bill!
Ostensibly passed to address the causes of the 2008 crash, the Dodd-Frank Act has instead spent more than half a decade now as a hostage to a payola Congress, with both parties taking turns cutting it down and delaying its implementation. The latest indignity is S.2155, a.k.a. the “Economic Growth, Regulatory Relief, and Consumer Protection Act.” Supposedly designed to help some banks by reducing capital requirements and ending regular “stress tests,” the act is really more like helping ships steam faster by allowing them to ditch their lifeboats.
But the bill isn’t just unnecessary – the banking sector smashed records with $56 billion in profits in this year’s first quarter – it’s also a Wall Street handout disguised as an aid to “Main Street” banks.
Ohio Sen. Sherrod Brown, a longtime critic of the “Too Big to Fail” banking system, opposed the bill. He pointed out upon passage that in one section of the act, “the change of just one word . . . forces the Fed to weaken the rules even for the largest banks.”
The microchange Brown refers to is a masterstroke of deregulatory trickery, one that should go in the Hall of Fame of legislative chicanery. The original Dodd-Frank Act said