FacebookTwitterGoogle+RedditEmail

Bringing Transparency to Wall Street

The calls for repealing the Dodd-Frank financial reform bill are more than a little bizarre. It was only three years ago that the whole financial system was at the brink of collapse, with President Bush warning us of a second Great Depression if Congress didn’t quickly approve a massive bailout bill.

This crisis was the result of a poorly regulated financial system that was issuing millions of mortgages that they did not expect to be paid off. It was packaging these bad mortgages in mortgage-backed securities and more complex instruments and passing them off to gullible buyers all over the world. And we had companies like AIG issuing hundreds of billions of dollars credit default swaps that they had no ability to support.

This is the pre-Dodd-Frank world. Is this the world that those demanding repeal want us to bring back?

Dodd-Frank is far from a perfect piece of legislation. It could have been much stronger. For example, it could have required that the too-big-to-fail banks break themselves up, so that they could no longer freeload on an implicit government guarantee of support if they get into trouble. It could also have reinstituted a strict Glass-Steagall type separation that prohibited banks that take government-insured deposits from engaging in risky investment banking or hedge fund type activity.

But it does make the risks of the financial system more transparent. And, it give regulators an alternative to bailouts to deal with the sort of Lehman-AIG situation we faced in 2008.

Given the economic disaster that was brought on by the mismanagement of the financial system, Dodd-Frank is actually a very mild piece of legislation. Its opponents have highlighted the paperwork requirements imposed by the law. In fact, smaller banks will not be forced to deal with most of the requirements since they are explicitly exempted. The Goldman Sachs and the J.P. Morgans of the world specialize in creating paperwork and therefore will have little difficulty dealing with the requirements of the law.

However, the more important issue is the logic of this complaint. There is plenty of needless paperwork in the Defense Department, by the logic of the Dodd-Frank repealers we should just shut it down and start from scratch.

That doesn’t make sense and it doesn’t make sense to repeal Dodd-Frank. The proponents of repeal should put their specific complaints on the table and argue the case. That is the way serious people do things.

This article originally appeared in Debate Club (U.S. News & World Report).

Exclusively in the new print issue of CounterPunch

One of the Greatest Descriptions of Farm Work Ever Written— Don’t miss Frank Bardacke’s marvelous account from the California fields. ALSO Linn Washington Jr. on the “Black Backlash Against Obama.”

Order your subscription today and get
CounterPunch by email for only $35 per year.

More articles by:

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC. 

Weekend Edition
December 14, 2018
Friday - Sunday
Andrew Levine
A Tale of Two Cities
Peter Linebaugh
The Significance of The Common Wind
Bruce E. Levine
The Ketamine Chorus: NYT Trumpets New Anti-Suicide Drug
Jeffrey St. Clair
Roaming Charges: Fathers and Sons, Bushes and Bin Ladens
Kathy Deacon
Coffee, Social Stratification and the Retail Sector in a Small Maritime Village
Nick Pemberton
Praise For America’s Second Leading Intellectual
Robert Hunziker
The Yellow Vest Insurgency – What’s Next?
Patrick Cockburn
The Yemeni Dead: Six Times Higher Than Previously Reported
Nick Alexandrov
George H. W. Bush: Another Eulogy
Brian Cloughley
Principles and Morality Versus Cash and Profit? No Contest
Michael F. Duggan
Climate Change and the Limits of Reason
Victor Grossman
Sighs of Relief in Germany
Ron Jacobs
A Propagandist of Privatization
Robert Fantina
What Does Beto Have Against the Palestinians?
Richard Falk – Daniel Falcone
Sartre, Said, Chomsky and the Meaning of the Public Intellectual
Andrew Glikson
Crimes Against the Earth
Robert Fisk
The Parasitic Relationship Between Power and the American Media
Stephen Cooper
When Will Journalism Grapple With the Ethics of Interviewing Mentally Ill Arrestees?
Jill Richardson
A War on Science, Morals and Law
Ron Jacobs
A Propagandist of Privatization
Evaggelos Vallianatos
It’s Not Easy Being Greek
Nomi Prins 
The Inequality Gap on a Planet Growing More Extreme
John W. Whitehead
Know Your Rights or You Will Lose Them
David Swanson
The Abolition of War Requires New Thoughts, Words, and Actions
J.P. Linstroth
Primates Are Us
Bill Willers
The War Against Cash
Jonah Raskin
Doris Lessing: What’s There to Celebrate?
Ralph Nader
Are the New Congressional Progressives Real? Use These Yardsticks to Find Out
Binoy Kampmark
William Blum: Anti-Imperial Advocate
Medea Benjamin – Alice Slater
Green New Deal Advocates Should Address Militarism
John Feffer
Review: Season 2 of Trump Presidency
Rich Whitney
General Motors’ Factories Should Not Be Closed. They Should Be Turned Over to the Workers
Christopher Brauchli
Deported for Christmas
Kerri Kennedy
This Holiday Season, I’m Standing With Migrants
Mel Gurtov
Weaponizing Humanitarian Aid
Thomas Knapp
Lame Duck Shutdown Theater Time: Pride Goeth Before a Wall?
George Wuerthner
The Thrill Bike Threat to the Elkhorn Mountains
Nyla Ali Khan
A Woman’s Selfhood and Her Ability to Act in the Public Domain: Resilience of Nadia Murad
Kollibri terre Sonnenblume
On the Killing of an Ash Tree
Graham Peebles
Britain’s Homeless Crisis
Louis Proyect
America: a Breeding Ground for Maladjustment
Steve Carlson
A Hell of a Time
Dan Corjescu
America and The Last Ship
Jeffrey St. Clair
Booked Up: the 25 Best Books of 2018
David Yearsley
Bikini by Rita, Voice by Anita
FacebookTwitterGoogle+RedditEmail