The 2010 Dodd-Frank Act was signed into law by President Obama two years ago, but critics maintain that the law, which was designed to curb financial abuses and reduce financial risk, is detrimental to America’s fragile economy.
“Supporters of Dodd-Frank touted it as ‘tough Wall Street reform,’ but its red tape reaches deep into the wallets and pocketbooks of millions of Americans and small businesses that had nothing to do with the financial crisis,” House Financial Services Committee Chairman Spencer Bachus said, according to Reverse Mortgage Daily.
Business owners have also testified to the law’s negative impact.
“Our bank — like hundreds of other federal- and state-chartered banks in Texas — did not originate toxic mortgages, we did not securitize those mortgages and we did not engage in the sale of derivatives like credit default swaps,” Jim Purcell, the CEP of State National Bank, said, Reverse Mortgage Daily reports.
Jim Hamby, a member of the American Bankers Association, said that too much government intervention is interfering with business.
“The calculus is fairly simple; more regulation means more resources devoted to regulatory compliance, and the more resources we devote to regulatory compliance, the fewer resources we can dedicate to doing what banks do best—meeting the credit needs of our local communities,” Hamby said, according to Reverse Mortgage Daily.
Consumer Financial Protection Bureau Deputy Director Raj Date, however, spoke in support of the financial reforms, as well as the agency’s progress in increasing transparency in the mortgage industry.
“The mortgage market should be driven by financial incentives that make sense—those that reward hard work and smart risk-taking,” Date said, Reverse Mortgage Daily reports. “Let me be clear: There is nothing inherently wrong with risk. Indeed, financial markets are supposed to absorb and price certain kinds of risk. But, people shouldn’t get paid for taking risk that they can’t understand, they can’t rank, they can’t quantify, or they can’t price.”