What is Dodd Frank and Why it Matters
In a nutshell, Dodd Frank was passed by Barack Obama in 2010 as part of a Wall Street Reform and Consumer Protection initiative after the financial crisis of 2007-2008. It was the largest overhaul to our financial regulatory system since the Great Depression. Pretty significant.
Some of the main pieces to Dodd Frank include more transparency and accountability for large banks and financial institutions. Essentially, no more bailouts. The bailout during the financial crisis of 2008 cost the United States Treasury Department $700 billion. This was not the biggest bailout the U.S. made, it's still ongoing. According to TARP, the U.S. committed, $16.8 trillion with $4.6 trillion already paid out leaving the banks to big to fail. Read more here on the bailout.
What could happen in repealing some regulations of Dodd Frank?
- Greater financial lending for smaller community banks and institutions.
- Less regulation and oversight of bank activities.
In a nutshell: Arguments for and against include, more lending could mean increased access to credit and mortgage loans, although this could leave the industry open to repeat history and the risky lending of past days, with taxpayers footing the bill for bailouts. Stay tuned.