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  • Morning Bell: Dodd-Frank Financial Regulations Strangling Economy

    Has your bank raised its fees or stopped offering free checking accounts in the last couple of years? If so, you can thank the regulatory boondoggle that is the Dodd-Frank financial law.

    Since its passage two years ago tomorrow, the number of large banks that offer free checking has declined sharply. In 2009, 96 percent of them offered free checking, but just 34.6 percent did in 2011.

    Senator Chris Dodd (D-CT) and Representative Barney Frank (D-MA) argued that their namesake would save America from another financial crisis—but most of the law’s provisions have little or no connection to the most recent crisis.

    For example, Dodd–Frank does not end bailouts and taxpayer support for big banks. Under the act, the Federal Deposit Insurance Corporation (FDIC) is permitted to purchase the assets of a failing firm, guarantee the obligations of a failing firm, take a security interest in the assets of a failing firm, and borrow on the failed firm’s total consolidated assets. (For Bank of America, that would be $2 trillion in bailout authority to be paid by taxpayers.)

    Congress has proven, in fact, that it grossly misdiagnosed the factors responsible for the financial crisis, while ignoring primary culprits such as Fannie Mae and Freddie Mac. But in its haste to appear relevant and on top of things, Congress has unleashed a staggering amount of new regulations that are actually harming—not helping—the economy.

    There’s a reason the financial regulation law has been called “Dodd-Frankenstein.” This monstrous creation will swell the ranks of regulators by 2,849 new positions, according to the Government Accountability Office. It created yet another new bureaucracy called the Consumer Financial Protection Bureau (CFPB) that has truly unparalleled powers.

    This new bureau is supposed to regulate credit and debit cards, mortgages, student loans, savings and checking accounts, and most every other consumer financial product and service. And it’s not even subject to congressional oversight.

    Frighteningly, the CFPB’s regulatory authority is just as vague as it is vast. More than half of the regulatory provisions in Dodd–Frank state that agencies “may” issue rules or shall issue rules as they “determine are necessary and appropriate.” This means, as The Economist put it, “Like the Hydra of Greek myth, Dodd-Frank can grow new heads as needed.”

    Congress avoided making real law here and passed the responsibility for “fixing” the financial sector to these newly minted bureaucrats. And that hasn’t been going too well.

    As Heritage’s Diane Katz explains in a two-year checkup of the law:

    As of July 2, 63 percent of the deadlines have been missed, which has intensified the cloud of uncertainty enveloping the finance sector—and the economy—since passage of the act. Thousands of businesses do not know what the government demands they do differently or when they must do it.

    The results of this haphazard regulation are dire, Katz says, because “consumers will experience tight credit, higher fees, and fewer service innovations. Job creation will suffer.” She adds that “financial firms of all sizes are shelling out hundreds of millions of dollars for regulatory compliance officers and attorneys rather than making loans for new homes and businesses.”

    So the law that was supposed to fix the financial sector—and created something called the Consumer Financial Protection Bureau—is hurting consumers rather than “protecting” them. Congress should repeal Dodd-Frank before it can do any more damage.

    See our Dodd-Frank Fact Sheet 


    Special Note: The thoughts and prayers of The Heritage Foundation are with the victims, families and people of Aurora, Colorado this morning following last night’s senseless tragedy. May God bless them.

    Quick Hits:

    • The AP reports that “A gunman wearing a gas mask set off an unknown gas and fired into a crowded movie theater in suburban Denver theater at a midnight opening of the Batman movie ‘The Dark Knight Rises,’” killing at least 12 people and injuring others.
    • President Obama’s campaign launched an ad claiming that he did not say “If you’ve got a business, you didn’t build that”—even though the ad includes a clip of his saying that.
    • When asked why his party didn’t push through tax increases when it had a majority in both houses of Congress, Senate Majority Leader Harry Reid (D-NV) said, “Next question.”
    • Tens of thousands of protestors joined union-organized protests in Spain after pay cuts for government workers were announced.
    • How will families pay for the harmful Taxmageddon tax increases coming in January? Check out our breakdown of how far $4,000 goes for families.
    Posted in Economics [slideshow_deploy]

    39 Responses to Morning Bell: Dodd-Frank Financial Regulations Strangling Economy

    1. Wildman says:

      Typical of Dodd / Frank. I am suprised they didn't make Franklin Raines the head of the regulation depatment.
      Just another two progressive Democrats doing their very best to bring Americas economy to a halt and make a even bigger recession. The people who voted these two in had to be complete idiots. These two even turned on them, and didn't give them anything. I am glad they are both gone now. tIn te meantime, small business is stifled, but many are still trying to operate underthe worst conditions I have ever seen in my lifetime. And those two traitors had a lot to do with it. Them, Acorn, and President Obama. they both should be in jail for all the lies they told. They should also have a lot of company.

    2. Kevin Sheridan says:

      I've said this for the last 1 1/2 years. Its hindered a financial deals I've been involved in. Keep self styled political "experts" who lack "wisdom" of the markets….out of our finances entirely. Just like OBAMA-CARE, the FRANK DODD ACT needs to be repealed. …

    3. What a surprise…Democrats pass a "Reform" to fix something and make the problem worse, because as always they ignore the facts and play to polling of the uninformed apathetic public and do what sounds good yet fixes nothing

    4. Curt Krehbiel says:

      " She adds that "financial firms of all sizes are shelling out hundreds of millions of dollars for regulatory compliance officers and attorneys rather than making loans for new homes and businesses."

      Strangling the economy to bring it to its knees is just another step toward total government control which will be fully implemented if Obama gets a second term. Communism is "creeping in on little cat feet."

    5. stephen says:

      More BS on a Friday morning Comrade ?

      • Stirling says:

        Sorry Steve, your have to tune into CNN for the Communist Comrade propaganda of the day.. Thanks for checking into HF for the truth though..

    6. Mike says:

      dummycrats are never on the side of business unless they're getting more taxes from them or giving handouts to certain groups.

    7. Tom Stein says:

      Have any of you opened a new deposit account at your local financial institution? A couple of weeks ago I opened a savings account where we have our checking account, mortgage loan, home equity loan, bill payer, etc. so I was extremely surprised when I had to provide information under the "Customer Due Diligence/Bank Secrecy Act." Information requested included my current employment (I'm retired), what job did I hold, am I a U. S. citizen, source of funds to open the account, e.g. insurance proceeds, legal settlement, pension, etc., plus there was an "Other" question asking for more information. As a Democrat I was offended and annoyed by these questions. Where are the days when you could open an account with name, social security number, and address? Forgot. The classic question was, "if I or any of my family members hold a prominent office in a country outside of the United States." And all I wanted to do was open a basic savings account. Obviously, some jerks in Washington approved this Act? It stinks!

    8. Johncdavidson says:

      The Democrats want to centralize everything so it will be a lot eaier for them to control everything.

    9. Guest says:

      Barney Frank has built his career and "personal" life on the misery of twelve million Americans who now face foreclosure
      The Gay/Marxist Agenda Barney Frank represents is cultural warfare.
      Frank’s so-called “marriage” is a publicity stunt.
      Frank’s only regret is that he didn't rip off enough from middle-class taxpayers.
      Frank’s philosophy is from the "we'll get ours" school of thought.
      There is nothing warm and fuzzy about a crooked Marxist who created the real estate housing mess and whose goal was to disenfranchise the American middle class.
      He used the letter of the law allowing shady mortgage companies to fast-forward banking foreclosures. And now he is hiding behind the letter of the law to save his own skin and obscure how he has profited.
      Massachusetts voters are sick of the Champagne Socialism Frank represents. As a representative, Frank refers to his constituents as “nobodies” who are “pieces of furniture.”
      The twelve million Americans who are facing foreclosure want to know when Frank is going to be convicted.
      If Frank had the guts to visit the people whose homes he has put into foreclosure, they would SPIT on him.

    10. Dr. Henry Sinopoli says:

      You continually under-estimate the commitment of life-long, blood-sucking politicians. Of course, Dodd and Frank are responsible for many of the ills of the financial crisis, but life-long politicians, Republican (Boehner) and Democrats, for years have seen this pattern of deception and graft building, it the financial industry and numerous other money-making schemes, and have all cashed in on the profits.

      Stop believing if you get rid of the Democrats that all will be perfect…You have too many committed "me" first politicians grabbing what they can from the public…Our system is falling and it can't get up.

    11. Rick Baugh says:

      The CFPB isn't the only federal bureaucracy able to make "rules" with the force of law: the EPA and the Dept. of HHS just to name two of too many. Each is a case of Congress abdicating their responsibility to pass laws that are accountable to the people. The more this country lets unelected and unaccountable bureaucrats make law, the further we sink into tyranny.

    12. victorbarney says:

      Hello? WAKE-UP America! That was EXACTLY "THEIR" INTENT! NONETHELESS, REMEMBER THIS FACT: OVER 70% of our population is made-up of GATHERER'S(WOMEN & BLACKS)! YOU KNOW, THE ONES THAT VOTED FOR THIS "PROMISED" FUNDAMENTAL TRANSFORMATION OF GOVERNEMENT INTO MARXISM, "ANTI-CHRIST" BY DEFINITION! DUH! WATCH! Especially starting Septembr 16, 2012 on the annual Israelite Feast of Trumpets(war) & the two-witnesses of Revelation, chapter 11. Just talking about what "already" is written….

    13. fedupinky says:

      It pains me that scumbags like C. Dodd and B. Frank can foist an economy killing bill on the American people and then just skip off into the sunset with all of their benefits, perks and ill gotten gains they made while in office. These two should be breaking rocks in the hot sun of a certain prison in Arizona run by a Sheriff who's first name is Joe. Same goes for all of the proponents of Obamacare including the head rat himself. Examples need to be made of all of these criminals so future generations do not have to suffer these fools and their money grubbing, power grabbing schemes ever again.

      • Give thanks for those scumbags. They are saving the banks from themselves. The banks have gotten so intoxicated with GREED they have become oblivious to the DAMAGE they are causing

    14. Bobbie says:

      How have and are dodd-frank regulations benefiting America? What was it's initial purpose that didn't benefit government over the people government is suppose to serve?

      Please lift and arrest! The regulations add complications that unfairly cost who govern their own, the private sector and to which the purpose of government shows no benefit or reason to benefit the people! It's corruption and puppet mastery America wants stopped! We're above the condescension by punks, adult punks with power! Where did American decency go in America's government? What good did it do for America in two years?
      There's a mental disturbance in government authority Americans are above and should never be subject to.

      • Robert Galloway says:

        Your post is probably all true. It rambles even more than most of my posts. Suggest you edit more in order to better get your point across. I say this with no criticism of what you say, only the rhetoric employed. Nobody reads long, convoluted posts, possibly excepting me.
        Robert H. Galloway

        • Bobbie says:

          So according to you, the "thumbs up" were people that didn't really read it?! That's pretty lowly, isn't it Mr. Galloway? Your criticism is anyway, appreciated.

    15. JJ says:

      The Liberal plan is very simple :

      1 grow the size of gov’t.

      2 put more on the dole

      3 allow illegals to vote

      4 pander to minorities

      5 continue class warfare

      do the above and stay in power

    16. If you want to understand absolutely everything, then read "The Harbinger" by Jonathan Cohn. I fact checked it as I read it and it was all true. We are walking down a path of destruction and until our leaders understand what they must do to reverse course, there is little hope of surviving life as Americans have known it. Please read this book….it can change your life and the way you view current events, and most especially the financial disaster we have created.

    17. Larry White says:

      Dodd – Frank does nothing to help "Consumers"…but it expands the federal bureaucracy.
      Obama Care does nothing to make health care more "Affordable"…but it expands the federal bureaucracy.
      Our Language has been stolen by the Liberals and soon, if we don't stop them in this election, THEY WILL STEAL OUR LIBERTY.
      Nothing short of a TRI-FECTA; Win the Presidency! Win the Senate and Win more of the House, will save the Country.
      I repeat one the earliest wisdoms of this fight"…bureaucratic despotism is worse than socialism!" Dr. Larry Arrn, President, Hillsdale College. NOW we are facing BOTH.
      God Bless America

    18. Cameron Cronkright says:

      2,849 new positions=additional job growth for our current administration. Hooray for the Dems and their efforts to keep America protected from the evils of banks and corporate monsters. Their willingness to make our socitey as dependent on government and its welfare approach to living is most refreshing (not).

    19. ron hansing says:

      Why not call it the "Hyde-Frankenstein law"? this is more appropitate.

      The real sadness, is that it is always the poor that gets hurt the most.

    20. Richard Brewer says:

      Back in the 1750s when Ben Franklin wrote the Albany Plan of how colonies should be set up to govern themselves he warned that too many government regulations would stifle business development. He was a genius. Come back Ben, we need you now.

    21. Robert Galloway says:

      I still believe that Barney Frank's major contribution to the collapse of our economy is his defense of lending standards at FNMA and FRMC. These agencies were forced? at least encouraged to follow policies that were unsound and Frank stone walled efforts from the administration to check into the implication of these policies. We are exactly where Frank (and the current administration) would have us be. Socialist dictator state anyone?
      Robert H. Galloway
      USA, Retired

    22. Donald DaCosta says:

      Chris Dodd and Barney Frank were intimate participants in the democratic cabal that authored the Community Reinvestment Act under Carter, later reinforced by William Jefferson Clinton in the late nineties and ultimately implemented and enforced by their partners in absurdity, the community organizers, ACORN in particular. This ultimately led to the housing bubble that caused the financial meltdown in 2007 that continues to this day, all in the name of creating the "right" of every citizen to private home ownership regardless of the ability or wherewithal to pay the price. Decades of applying mortgage loan experience relative to loan risk were incorrectly interpreted as “red lining,” portrayed as the deliberate denial of mortgage loans and thus home ownership to those “unfairly” considered inferior by bigoted, “fat cat,” predatory lenders concerned only with profit, payback and the ability to foreclose, the latter considered the ultimate profit maker (you can’t make this stuff up). A stable employment record and sufficient income as a measure of an ability to pay were discarded in favor of minority status, income below the established poverty level and residence in a red lined area.
      A direct indicator of just how absurd was this exercise in Government interference in the private sector, was the assignment of the task of "reform" to Dodd and Frank; more interference to correct the economic disaster that ensued as a result of their previous egregious interference and so the house of cards continues to build on its very shaky foundations.
      If America does not awaken to the disastrous effects that government intrusion into the free markets inevitably causes and continues to look to government and their elected politicians as the only individuals capable of solving their economic travails, America will continue its decline into mediocrity.

    23. Tucano Fulano says:

      Messrs Dodd and Frank are known as the most anti-American elected officials right along with Mr Obama. Together with their dupes and supporters they have as their objective the destruction of the USA and the enslavement of Americans.

    24. TonyM says:

      Another effect of this bad bill is the onerous frederal compliance put on banks in order to make commercial loans. It is so bad that banks require one and one-half compliance offiers for every loan officer. This effectively puts bank out of the small business market where loans of less than $100 million are regular requirements because they can't make a profit due to the extra salaries they have to pay. In order to make a profit under these regulations, banks need to make $500 milllion and up loans. Smaller banks don''t have the financial muscle to particpate in that market. That has opened up that segment of the loan market to private equity firms, you know, like Bain, the ones Obama likes to hate. So if the small business market is to be saved it will be private equity that saves them. Three hundred banks have already closed and several hundred more are on the FDIC watch list. Thank you Barney Frank and Chris Dodd for your foresight in helping to prevent the next financial crisis.

    25. ThomNj says:

      "And it's not even subject to congressional oversight" – BINGO – and it is housed in the Fed, no less. I never understood how even the dems could vote for that. The jerks in Congress basically gave a private bank the right to oversee us financially. Truly, truly bizarre.

      Need a repeal.

    26. Casey Carlton says:

      Congress has proved once again that it can take any problem and make it worse. Dudd-Frankenstein is one more example of incompetent career politicians messing with something they should not be allowed to touch.

    27. Joseph McKennan says:

      I haven't seen any comments about the fact that both are now retired. The last I heard Frank was looking for a new boyfriend.
      The citizens of the US should show their appreciation and put a hold on their pensions until they go to their eternal reward.

    28. Frederick says:

      I am seriously thinking of giving up my U.S. citizenship and leaving this country upon retirement. The country. is becoming more corrupt by the day and the majority of its citizens (and non-citizens) are so ignorant and apathetic of the country's origins. I no longer recognize the current U.S. from the early U.S. If it is to survive there must be a mass change in the thinking of it's citizenry on the multitude of issues which the Heritage Foundation has presented. I am so sick of fighting each and every one of these immense problems.
      I am beginning to believe that the Right is going to lose this one. There are just not enough willing fighters on our side. Oh, I'll still keep fighting as long as this is my country. But do stop and think about what our Founding Fathers and Mothers would be doing in our situation. Would not the tree of liberty have already been watered with the blood of tyrants?

      But we would not dream of taking up arms for their (Washington, Jefferson, Franklin, Hancock, etc.)cause. And our cause is so much worse.

    29. Max Kummerow says:

      Reality check: The economy fell over in 2008, a decade after de-regulation let the banks start speculating and making lousy loans. Dodd-Frank did not go far enough to correct these abuses because of intense lobbying from people like you. So, our economy is going to fall over again. These lessons should have been learned by 1935, but some people are just unteachable. Dodd-Frank did manage to add a little bit of consumer protection that will cost banks some profit so they are screaming again. The reason banks have raised charges to consumers is a) because they have the market power to do it, b) they need to do it because they blew our money on stupid loans. The fundamental problem is that in good times, the way to be a successful bank executive is to underprice risk in order to gain market share. So bad lending drives out good lending. Markets do not get it right. Markets, in fact, get it wrong. Regulation of banks, insurance and securities is not a luxury or a waste, it is essential to keep markets functioning. In summary, the American right wing has bought a load of bs. and continues to insist its true after its been proven false by events.

    30. The Right View says:

      I didn't know where else to bring up this subject, but I greatly respect your opinion and would like to see what you think of this organization and it's focus on developing a Capitalistic/Socialistic economy??? I'm going to read some of their books and comments to know their philosophy better and if it's simply a partial move to socialism. Thank you.

    31. GRACE E. PRATTI says:


    32. W. E. James says:

      One thing I have noticed in my locality is the number of banks which are building new facilities — while offering a pittance in interest to depositors and savers. What is this all about?

    33. Amy without Dodd-Frank the financial institutions would STRANGLE THE WORLD.

    34. self says:

      I just applied for a home equity loan to consolidate debt (not to add new debt!) but to consolidate. I have approximately $23,000 in equity in my home. I have excellent credit (+780).

      This was the first time I've ever been disapproved. Loan to value is too low. Now you can't even loan on the amount your home is worth.

      I hate liberals.

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