On the fifth anniversary of a landmark — and controversial — piece of financial regulation, one of the bill’s defendants reflected on what it was like trying to pass the law.
Senator Elizabeth Warren (D-Mass.) spoke about the Dodd-Frank financial reform act in an interview with Americans for Financial Reform, an advocacy group.
“David can beat Goliath — that’s the meaning of Dodd-Frank,” said the senator, who was a founding member of the Consumer Financial Protection Bureau, established under the act.
“We built Dodd-Frank with the biggest, most powerful institutions fighting us every inch of the way.”
Dodd-Frank was designed to improve bank accountability and transparency, end “too big to fail,” and protect taxpayers and consumers.
Some elements have already been repealed in Congress. Others have yet to be fully realised — like part of the controversial Volcker Rule that prohibits banks from engaging in proprietary trading and investing in hedge funds and private equity firms.
Here are Warren’s comments:
Of course, critics of Dodd-Frank have also reflected on the law, five years on.
Speaking at a hearing earlier this month, Financial Services Committee chairman Jeb Hensarling (R-TX) said, “Undoubtedly it is the most sweeping and dramatic rewrite of banking and capital markets laws since the New Deal.”
He pointed to other potential problems that might arise in the wake of the Dodd-Frank law.
One concern he highlighted is the possibility that risky behaviour will get pushed out to less-regulated institutions. Another is the growing sense of anxiety throughout the industry that heightened regulation has led to illiquidity in financial markets.
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