Nine years ago this month, the US sub-prime mortgage crisis morphed into a severe global financial crisis. Many Americans across the political spectrum angrily demanded financial reform, by which they meant a tightening of financial regulation. Indeed, important reforms were subsequently enacted, in particular the 2010 Dodd-Frank bill.
Today, those reforms are increasingly under assault. Most recently, the Trump Administration is proposing a roll-back of regulation of banks as well as of other financial institutions. The recent decisions of Fed Governors Stan Fischer and Dan Tarullo to retire are also worrisome signs.
Part of the problem is that few voices are heard in support of shoring up Dodd-Frank. Have those who wanted more financial regulation in 2010 changed their minds, and decided that banks deserve to “get the government off their backs”? Or do they not understand how much Dodd-Frank accomplished? I think it may be the latter.
I have just written a short explanation of the Dodd–Frank Wall Street Reform and Consumer Protection Act. I tried to make it accessible to a general readership.
It is my first contribution to EconoFact, which is a non-partisan publication designed to bring key facts and incisive analysis to the national debate on economic and social policies. The brain-child of Professor Michael Klein, EconoFact is written by a network of leading economists from across the country and published by the Edward R. Murrow Center for a Digital World at The Fletcher School at Tufts University.