Paul H. Kupiec is a resident scholar at the American Enterprise Institute. He is a former director of the Center for Financial Research at the Federal Deposit Insurance Corp. and a former chairman of the Research Task Force of the Basel Committee on Banking Supervision.
The 2010 law does very little to constrain regulatory power, explaining why Republicans pushed for reforms during the Obama presidency and why, under President Trump, Democrats are so vigorously opposing agency management changes.
The solution supported by the largest institutions and some officials to what banks say is a market liquidity problem would only make matters worse.
As Treasury Department officials review the Financial Stability Oversight Council’s designation process, they should also re-examine how the Dodd-Frank Act defines systemic risk.
Data analysis shows that a 21st-century version of the Depression-era limitations on bank activities will do little to meet the goals laid out by its proponents.
In reality, the proposal to toughen bank capital requirements has appeal both for those who want to unwind the Dodd-Frank Act and regulatory hawks who want to keep banks in check.
Overhauling the S&L crisis-era method for intervening in struggling banks, which did not live up to expectations during the 2008 meltdown, should be a higher priority.