Two years after the enactment of the 2010 Dodd-Frank Act, evidence supporting critics’ claims that the law is detrimental to the U.S. economy and businesses is still pouring in.
While the law designates 400 rule-makings by 11 different federal agencies, many of those provisions “have little or no connection to the financial crisis that provided the excuse for their creation,” a Heritage Foundation factsheet reveals.
Additionally, while Dodd-Frank was intended to end too-big-to-fail, the law does not completely eliminate such institutions. The Federal Deposit Insurance Corporation may, in the event of a firm’s failure, purchase or guarantee the assets and obligations of the firm.
Market participants have also noted the increased costs associated with the massive financial reform law. The Congressional Budget Office estimates that Dodd-Frank will impose $27 billion in new assessments and fees on America’s financial institutions, in addition to approximately 2.2 million annual labor hours associated with compliance.
As a result of the increased costs, many financial institutions have eliminated free checking programs and increased fees in other areas to compensate for lost revenue. The number of major banks that offer free checking fell from 96 percent in 2009 to 34.6 percent in 2011.
Critics of the law also argue that the law extends unlimited authority with little accountability to the Consumer Financial Protection Bureau, the funding of which is currently not subject to the congressional appropriations process.