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Dodd-Frank Five Years Later

July 20, 2015
Weekly Columns

Five years ago this month, President Barack Obama signed into law a bill that vastly restructured the American financial system. Brought about in response to the financial crisis and resulting recession in the last decade, the Dodd-Frank Wall Street Reform and Consumer Protection Act was presented as the means to protect consumers, encourage recovery and ensure financial stability in the future. Instead, the reality of Dodd-Frank has meant more rules and government regulators, fewer jobs created, slowed recovery and less American opportunity.

Rather than streamline regulations or regulating bodies, Dodd-Frank has added to the regulatory burden with 400 new rules accompanied by unaccountable government bureaucracies like the Consumer Financial Protection Bureau and Financial Stability Oversight Council. Supposedly intended to make financial institutions—particularly big banks—more accountable and transparent, the rules created by Dodd-Frank have caused confusion and cost much time and money to ensure proper compliance. In addition, the law created a system that provides for taxpayer-funded government bailouts for “too big to fail” banks. If faced with closure, no such system exists to rescue smaller financial institutions.

Unfortunately, the compliance burden has been most detrimental to smaller institutions that serve families and small businesses across the country. Due to the burden imposed on these community institutions, many consumers have lost access to valuable services like free checking. In the same vein, small businesses and entrepreneurs now have difficulty acquiring low-interest loans for expanding or starting up that were previously more readily available through community institutions.

Because some of the rules prescribed in the law have not been written, the confusion over compliance and high cost associated with it will continue in the days ahead. Already, the rules that are currently written cover more than seven thousand pages and cost millions of hours per year to interpret—stealing precious and productive time from businesses to pursue innovation and growth. That means fewer jobs are being created because of the regulations imposed by this law. And without reform, we are likely to fall into yet another fiscal crisis.

Since taking control of the House, Republicans have led efforts to change the consequences brought about by Dodd-Frank. The House Committee on Financial Services, where Congressman Frank Lucas is a senior member, has held numerous hearings specifically on Dodd-Frank, including several this month. The committee has also reported several bills to the House floor that would repeal, reform or fix provisions mandated by the law. As legislation comes to the floor, I will continue to support similar measures to lift the burdensome regulations imposed by the law.