Financial professionals have long lamented the lasting implications of the Dodd–Frank Wall Street Reform and Consumer Protection Act, signed into law in 2010. From the creation of new Consumer Financial Protection Bureau to hundreds of rules that have gone into effect and more that are still under way, it was and is a game-changer for financial services companies nationwide.
In a letter to members, however, American Bankers Association President Frank Keating makes a strong case for many elements of Dodd-Frank—a not often seen position in the industry—in referring to a recent op-ed by Treasury Secretary Tim Geithner.
“Treasury Secretary Timothy Geithner in (“Financial Crisis Amnesia,” op-ed, March 2) correctly states that regulators didn’t have the tools they needed to avert or effectively mitigate the 2008 financial crisis. That is why banks, contrary to popular belief, supported many of the core reforms contained in Dodd-Frank, including federal supervision of the shadow banking industry.
Had the law focused exclusively on such core issues, banks and the Obama administration would likely be engaged today in a productive, cooperative effort to rebuild our economy. However, the powers that drove the process took a while-we’re-at-it approach, lumping draconian, ill-considered and sometimes unrelated “reforms” into the legislation that have put banks in an operational straitjacket. Not surprisingly, a wary if not hostile relationship has set in between two of the most important drivers of our economic recovery: policy makers and banks. What could be more counterproductive?
Perhaps if the law’s staunchest defenders could do as Rep. Barney Frank himself has done and acknowledge the fallibility of some parts of this law, we could turn the page. Few measures passed in response to crises score straight As on the practicality test, and the risk runs higher for a statute as massive as Dodd-Frank. When theory clashes with the real world, the responsible thing to do is reconcile the two. That—and not amnesia—is what’s behind calls for changes to the law.”
…The truth is that Dodd-Frank is neither an abject failure nor an unqualified success, and it’s time to stop thinking in such absolute terms.”
View the full letter.
Written by Elizabeth Ecker