Should We Worry About the Rollback of Dodd-Frank? Nah!

President Donald Trump signed into law some legislation that rolls back the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, measures enacted in an attempt to fix the things that may have contributed to the credit crisis of 2007. What will this actually change — and is it cause for concern?

Apparently enough safeguards have been left in place for the Brookings Institute to essentially tell everyone to calm down because “Dodd-Frank was neither repealed nor gutted,” as the Washington DC-based think tank also entitled its report on the subject.

Actually, the Brookings Institute argues that the basic spirit of Dodd-Frank is “here to stay.”

Core Elements of Dodd-Frank Remain

The new law leaves in place the Consumer Financial Protection Bureau (CFPB), the watchdog agency that formed in Dodd-Frank. It also maintains regulations on large banks and the federal government’s ability to dismantle a failed financial institution.

Although the House of Representatives had considered legislation that would have fully repealed and replaced Dodd-Frank, the Senate rejected it and instead arrived at a bipartisan deal that ultimately shaped the final legislation that Trump recently sined into law.

That said, the most significant change in the new law is that it increases the size at which a bank becomes subject to enhanced regulation by the Federal Reserve.

And the difference is substantial — from $50 billion in Dodd-Frank to $250 billion in the new law, with the stipulation that the Federal Reserve can apply it to any specific bank with $100 billion in assets if the Fed believes it necessary.

Meanwhile, the bill Trump signed into law qualifies as much less dramatic than what he’d promised while campaigning — a complete overturning of Dodd-Frank.

The law also doesn’t do much to address the issues that arose from the Equifax data breach in September, despite promises by Congress to do exactly that with this particular piece of legislation.

If anything the bill signed into law simply loosens up the existing Dodd-Frank law without actually changing it.

Readers, what concerns do you have about the current state of legislation surrounding financial institutions?

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