Last July, President Barack Obama signed the Dodd–Frank Wall Street Reform and Consumer Protection Act into law, the most sweeping overhaul of the financial regulatory system since the Great Depression.
Dodd-Frank introduces a number of reforms aimed at Wall Street. And, unsurprisingly, big banks and other financial institutions aren’t very happy about it. Wall Street unleashed an army of lobbyists onto Capitol Hill in an attempt to convince congress to dismantle Dodd-Frank as much as possible, and they’ve found a captive audience in the GOP.
This is bad news for consumers. The Dodd-Frank legislation created the Consumer Financial Protection Bureau (CFPB), the first financial regulator with the express mission of catering to consumers, not big banks and other financial institutions. When it opens in July, the CFPB will advocate on behalf of consumers against unfair and illegal practices by these financial giants. They’ll be tackling issues like confusing financial contracts, credit report errors, unfair overdraft fees, high-cost prepaid cards and costly payday loans. Consumers will finally have a powerful advocate working on their behalf – something big banks and financial institutions are considerably afraid of.
But it’s also bad news for the future stability of the global economy. If the reforms in Dodd-Frank are eroded to the extent that big banks and other financial institutions want, the economic climate that brought on the recent financial crisis could very well happen again. The findings of the Financial Crisis Inquiry Committee concluded that the crisis was an “’avoidable’ disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street”.
Indeed, the repeals Wall Street want would push regulations back to where they were before the financial crisis. Watering down Dodd-Frank would be, in the words of Senate Banking Committee leader Tim Johnson (D-SD), “dangerous and irresponsible”.
If you’d like to oppose attempts to chip away at the CFPB, you can sign the petition here.