Beatty Marks Fifth Anniversary of Wall Street Reform Act
Beatty Marks Fifth Anniversary of Wall Street Reform Act
Dodd-Frank most sweeping financial reforms since 1930s
WASHINGTON, D.C. – Over the past two weeks, U.S. Congresswoman Joyce Beatty (OH-03) has observed the five-year anniversary of the Wall Street Reform and Consumer Protection Act (Dodd-Frank), which was signed into law by President Obama on July 21, 2010. Dodd-Frank was enacted in response to the 2008 financial crisis, which was caused by the collapse of the housing bubble – fueled by low interest rates, easy and available credit, and toxic mortgages – that brought our nation to the brink of another Great Depression.
Rep. Beatty submitted the statement below for the Congressional Record celebrating the five year anniversary of the enactment of Dodd-Frank:
Last week, House Democrats recognized the 5th anniversary of Dodd-Frank – the most sweeping financial regulatory reform in the United States since the 1930s. Signed into law by President Obama on July 21, 2010, Dodd-Frank has changed – for the better – the way consumers, investors, and other market participants interact with our financial system. It has provided oversight to Wall Street, giving regulators the tools to end the era of “too big to fail” entities and outrageous taxpayer bailouts, and has eliminated loopholes that allowed risky and abusive practices to go unnoticed and unregulated.
But how did we get here?
Five years ago, Dodd-Frank was enacted in the wake of profound economic devastation as our nation was reeling from the impact of the 2008 financial crisis. Millions of Americans suffered job loss, many small businesses closed down, foreclosures skyrocketed, the stock market suffered large drops, and a looming repeat of the Great Depression was feared.
Specifically, in the six months before President Obama took office in February 2009, our economy lost a total of nearly 4 million private sector jobs – an unimaginable average of 650,000 jobs per month! Nearly $13 trillion in economic growth and $16 trillion in household wealth simply disappeared while close to 9 million individuals were displaced from their homes. 2008 was truly one of the lowest economic points in U.S. history.
Yet, the American people weathered this storm and Congressional Democrats took action by passing legislation to restore responsibility and accountability in our financial system, and to give Americans confidence that we were the tools in place to avoid another economic crisis.
In fact, since Dodd-Frank’s passage in July 2010, the American economy has experienced vast improvement in private sector job growth with nearly 12 million jobs added; a lower unemployment rate, to 5.3 percent from the peak of 10.0 percent in October 2009, and a recovering housing market. Indeed, because of Dodd-Frank, financial regulators are now empowered to identify and address risks to our financial system through increased monitoring and stricter rules for our nation’s biggest banks in a timely way.
Dodd-Frank also provided new authority to the Securities and Exchange Commission (SEC), which, since 2011, has recovered more than $9.3 billion in civil fines and penalties despite Republicans’ repeated budget cuts to the agency.
Like all comprehensive reform bills, however, Dodd-Frank is not perfect. There are a few areas that I believe can be improved. Nonetheless, it is important that we do not let the perfect be the enemy of the good. I believe we also have a responsibility to build upon and improve this legislation when needed.
One area of concern for many stakeholders in my district, and across the country, is the manner in which Dodd-Frank requires the Federal Reserve to subject bank holding companies with more than $50 billion in consolidated assets to enhanced regulatory supervision.
However, if we are to subject smaller, regional bank holding companies to the same or similar supervisory requirements, then we should do so in a way that balances our nation’s financial stability without placing excessive burdens on non-systemically important institutions by using a more deliberative assets-and-activities-based test should be considered in determining the “systemic importance” of bank holding companies.
Earlier this month, Chair Yellen testified that she was open to raising a threshold for determining a bank’s systemic importance. I look forward to working with her on this issue. This is at the top of my priority list for improving Dodd-Frank.
Another area of concern for me lays in the development of diversity assessment standards under Section 342 of Dodd-Frank, also known as OMWI. Though Section 342 is not very long, it is a very significant step in the effort to improve the hiring of women and minorities in the financial services industry in which these groups remain woefully underrepresented.
However, due to misinterpretations of congressional intent, I am concerned that after five years the federal financial regulators have not developed standards requiring the disclosure of diversity data, which would provide much needed transparency to this industry regarding the promotion of diversity in its workplace. In order to continue being a successful nation, we must capitalize on our diversity and tackle the inequality in wage and job growth in African-American communities.
Today, I celebrate substantial achievements of Dodd-Frank and look forward to working with my congressional colleagues to find the appropriate tweaks to further facilitate its positive lasting effects on the financial markets and for consumers far beyond this five-year anniversary.
# # #