Making much needed changes to the landmark Dodd-Frank Bill would go a long way in helping to provide protection to consumers in the United States. Why is it that Liz Warren continues to prevent this type of reform from taking place?
Congress has been doubling its efforts to provide a budget arrangement that would help to prevent a government shutdown. Part of these efforts could and very well should be to come up with an amendment to the Dodd-Frank Bill that would help to provide much-needed reform. To get this done, the congress will have to get past the current objections to said amendment that have come from Senator Elizabeth Warren, herself.
Experts say that Warren should do all that she can to welcome an amendment to help reform Dodd-Frank, being as it would help to provide better protections to consumers; a cause that she has long been a champion of. Particularly, she has said that she wants to usurp the power of big banks in order to provide more power and stability to both consumers and smaller banks. Dodd-Frank has, indeed, helped to take away some of the power that the biggest banks have traditionally held. A complete overview of all of the ways this has happened is much broader than can be covered in a single article. One example, however, helps to describe how important this point is. The increased supervisory power that Dodd-Frank gave to the Federal Reserve Bank allows it to have a huge amount of control over what is described as “systematically important financial institutions. This control includes whether or not employees should be disciplined or even fired.
This extraordinary amount of power allows the Fed to get in far too deep with regards to the process of capital allocation. This is the very backbone of the United States economy. This could move our country from allocating capital strictly based on political sway and could help to take away the power of big banks and other systematically important financial institutions.
However, smaller banks have suffered a lot more than the bigger banks because of Dodd-Frank. These banks are drying up at double the rate that they were prior to the bill coming into play. Between October of 2000 and July of 2010 there were 242 banks that failed. But from then until the end of 2014 – a period that is less than half that length of time – there were 242 banks that failed. The big reason that so many small banks continue to fail is due to the burden that Dodd-Frank regulations have put on them. There are nearly 850 pages of regulations that these smaller financial institutions must contend with in order to stay in business. There are now more than 20,000 additional pages of regulations, and only 247 of the 390 that are currently required have been officially finalized. Staying on top of all these regulations requires the help of lots of lawyers. Big banks may be able to afford all of that legal assistance, but the smaller institutions simply cannot.
The bottom line is that if Warren really fancies herself to be a champion of the people, with regards to financial issues, then she must step up to the table and help in getting the new amendment passed. Failure to do so will wind up in more small banks going out of business and will ultimately mean that American consumers have even fewer banking options to choose from in the future. The ball is now in her court; experts hope that she will do the right thing and help to get the new reforms in place.