This is NOT politics guys, so if you have a political comment keep it to yourself. This is economics. I just read this release by my (moderate!) Republican senator, in regards to this bill in the Senate now. The way he explains it, he makes it sound like a good thing, but I'm leery. I don't greatly understand everything about the economy but know we have some economic gurus on here.

If I'm understanding this right, the Frank Dodd regulations were put in place to prevent another housing bubble from occurring, and this bill would do away with those regulations? Is that correct? How is that a good thing?

https://www.wicker.senate.gov/public/index.cfm/weekly-report?ID=E916EA70-29CE-46EB-B541-AA9379D1E81C


Mar 12 2018
Wicker Supports Senate Effort to Roll Back Dodd-Frank Regs
Community Banks to Benefit From Banking Reform Bill
For the past eight years, our nation’s small banks and credit unions have been caught in the crosshairs of an onerous regulatory regime built by the Dodd-Frank financial law. The law’s multibillion-dollar compliance costs have hampered the important roles these local banks play. Now, with a new bipartisan bill for banking reform, the Senate has a good chance of providing much-needed regulatory relief to the smaller financial institutions that serve our communities.

I support this aggressive rollback of Dodd-Frank’s harmful regulations and look forward to the bill reaching the President’s desk. Having cast a firm “no” vote when Dodd-Frank was considered by the Democrat-led Senate in 2010, I believe this relief is long overdue. The law’s onslaught of red tape was not the answer to the 2008 financial crisis nor a substitute for real consumer protections. Americans in rural areas are among those especially hurt when their community’s only financial institution cannot meet Dodd-Frank’s big-bank requirements. The new Senate bill would protect small banks from these requirements, stipulating that banks must have at least $250 billion in assets, much higher than Dodd-Frank’s $50 billion threshold.

Consumers Are Left Empty-Handed as Small Banks Close

Without these protections, many small banks have found that dealing with high compliance costs and a climate of regulatory uncertainty is unsustainable. Since Dodd-Frank, community banks have closed or consolidated at an alarming rate, ultimately leaving consumers and small businesses with fewer choices for their finances and less access to job-creating capital. Small banks simply do not have the financial or human resources to comply with regulations designed for big financial institutions. Moreover, as small banks merge, the big banks get even bigger.

Community banks were not responsible for the economy’s downturn. However, they can help strengthen its resurgence as the primary source for small business loans under $1 million. This access to capital could make the difference for first-time homebuyers or an innovative startup.

Wicker Amendment Would Help Mississippi’s Rural Banks

To empower our small banks and their services to consumers, I have put forward an amendment to the banking reform bill that would exempt small banks from specific rules on capital that were designed for large financial institutions. My amendment would benefit several rural banks in Mississippi, which have not been spared from these burdensome capital requirements.

The central role that small banks play in our local communities cannot be overstated. The success of Main Street should not be jeopardized by Washington’s bureaucratic reach to rein in the excesses of Wall Street. Community banks are directly connected to the people they serve.

Given the return of high business optimism and positive economic news, now is a golden opportunity to offer our small banks the relief they need. The Senate’s banking reform bill would do that, once again demonstrating the commitment by Republicans to remove costly regulations impeding economic growth. The bill’s broad support suggests that even Democratic lawmakers who supported Dodd-Frank now recognize its flaws and the ways in which the law has not changed the banking landscape for the better.

It's long overdue !! repeal it entirely !

Can you explain why? I must be missing something?

x2

Dodd-Frank is a regulatory nightmare that does nothing but create "Too big to fail" banks.

I say repeal it and do away do away with taxpayer bail outs.

Dodd - Frank has hurt us all.

Get rid of it.

As others have noted, it is unnecessarily complex and created regulatory costs that small banks could not afford.

Also, Dodd-Frank set up the CFPB which is unaccountable to ANY branch of government ...so no oversight. It's budget is unlimited and is funded by the Federal Reserve rather than Congress. It's reason for existence was to extort funds from disfavored industries...by the previous administration. It amounted to a slush fund for anti-capitalist inclinations ....also of the previous administration.

Ok, I still don't really understand it all but sounds like most of you think reforming or even getting rid of it is a good thing.

I guess my main question is if it was totally gone (which I don't think is what they're proposing, just scaling back), what would prevent the banks from giving loans to people they know could never pay them back, like they did before?

Because they were FORCED to make those loans before. Without D/F they would not make those NINJA ( No Income No Job, or Assets) loans

Not trying to hijack the thread, but White, what do you think about glass steagall?
My understanding: it limits communication between commercial and investment bankers so that they can't work against their clients beat interest. What are the downsides?

The bill failed to work the way it was intended. It was hoped to prevent the large banks from creating risky accounts and then sell insurance at a profit to cover those. What it did it really curbed the ability of small financial planners and investment managers from working with clients and thus only the larger firms were a viable source.
What we need to be worried about with the repeal is will it allow the larger banks the ability to do what they did in the past and still get bailout coverage?
The checks in this bill did not work as intended but then a total repeal can put us back into the 2008 model again and these banks are much larger with less competition and more political clout than they had a decade ago. It is not surprising that with historically low interest rates that banks needed to find other sources of revenue other than fees so they created bonds, funds and all other items to be able to play in the rapidly growing equity market. With interest rates still where they are at I don't see the large banks sacrificing much if anything that they have now. We are in a less regulation mode now and it covers a wide breadth of our economy.

Bryce

Are you asking that question because of my comments about NINJA loans or just in general ??

Hold on now. One of the biggest causes of the bubble was loan bundling, and selling. So the individuals/banks initially approving the loans, were off the hook by the time they failed. There was no forced approval in that. How does removing current regulations protect against this scenario repeating?

What does bundling have to do with defaulting, either pay it back or you don't.

When the next bubble breaks its gonna be very messy.....

Frank-Dodd was just a big gift to the mega banks and it put many smaller lenders out of business, lenders who were more flexible with their lending practices, lenders who would loan money to small businesses.

I used to make private loans to small-time builders who couldn't get loans from banks, these loans were secured through Deeds of Trust on the borrowers property. Frank-Dodd made it virtually impossible for me to continue making these loans. This resulted in many small builders going out of business.

Frank-Dodd was a sleazy, crooked con job. They knew exactly what they were doing, and it wasn't meant to help the little guy; just the opposite.

I have spoken at length with the president of my local bank. From the way he described the regulations of DF, compliance was a ridiculously time consuming exercise. Local banks are the best originating locations for most reasonably sized loans. Local bankers know who the best risks are. Any laws that reduce unnecessary paperwork and keep banking relationships as local as possible are, in my opinion, good.

Bundling and selling. If the person approving the loan suffers no consequence when the loan defaults, then he has no reason to be judicious in approving the loan.

It is for this very reason that the housing bubble demonstrated what happens when the invisible hand is removed from capitalism.

They wouldn't have made those loans without the possibility of taxpayer bail outs.

They wouldn't have made those risky loans without the fraudulently rated derivative markets.