Obama touts Dodd-Frank's staying power
WASHINGTON — On the 10th anniversary of the Dodd-Frank Act being signed into law, its key supporters touted the law for surviving years of opposition.
Former President Obama and the legislation’s authors, former Sen. Chris Dodd, D-Conn., and former Rep. Barney Frank, D-Mass., said at a virtual event that key provisions of the law are unchanged despite efforts by the Trump administration and members of Congress to roll back the 2010 reforms.
“In the years since I left office, the same forces that opposed us back then have been doing their best to undermine the law,” Obama said during the event hosted by Better Markets. “And while they’ve had some successes, the core of Wall Street reform remains intact. Our reforms are still promoting financial stability. They are still blocking taxpayer bailouts. They are still protecting consumers and investors.”
On July 21, 2010, Obama signed the landmark law creating the Consumer Financial Protection Bureau, granting the Federal Reserve sweeping new powers to supervise large banks, establishing the Financial Stability Oversight Council to identify systemic risks and designate nonbank behemoths for Fed oversight, and much more.
In the years since, some of the law's bite has been softened. Two years ago, Congress passed bipartisan legislation to relieve smaller institutions from some of the Dodd-Frank regulations. Under the Trump administration, the CFPB and FSOC have taken a less aggressive approach to the indusry compared with Obama's regulatory appointees.
Most recently, the Supreme Court threw out a Dodd-Frank provision that limited the president's ability to fire a CFPB director.
Dodd said that despite efforts by Trump-appointed leaders at the CFPB to scale back rules and rein in enforcement, the current legal framework would enable a Democratic administration to carry out the intent of the legislation.
“We now have the structure and the architecture to address those issues under the proper administration,” Dodd said. “Barney and I never guaranteed that we would be able to solve all future problems. In the political system in this country and elections where votes matter. So we lost the head of the Consumer [Financial] Protection Bureau. … But I want to remind people today in this conference, we’re not going anywhere. … The heart of what we did 10 years ago is the law of the land today in the United States.”
Frank said that even when Republicans had control of the House and Senate in 2017 and 2018, they weren’t able to reverse the core reforms.
“One of the things that strikes me was the extent to which Republicans made very partisan criticisms of what we did and then from 2011 until the beginning of 2019, they did virtually nothing to correct any of what they said were grave errors,” Frank said.
Supporters of Dodd-Frank said the law ensured banks had the capital to weather the current coronavirus pandemic and support the economy as businesses have had to close due to stay-at-home orders.
“Even with a pandemic that’s added a historic level of joblessness and contraction, so far, these reforms have helped prevent the crisis from spiraling into a financial crisis too,” Obama said.
Dodd agreed that the legislation provided the financial system with the strength to support the economy during the pandemic.
“If we had the complication of a financial system that could not respond, as well as the pandemic and all of the economic implications of that, we’d be in such a deep hole and I worry if we could get out of it,” Dodd said. “The strength of our financial institutions has made an incredible difference.”