IDEAS home Printed from https://ideas.repec.org/p/nfi/nfipbs/2011-pb-02.html
   My bibliography  Save this paper

Will (Should) Dodd-Frank Survive?

Author

Listed:
  • Peter J. Wallison

Abstract

Despite the fact that it grew out of a financial crisis, the Dodd-Frank Act was not the result of a bipartisan consensus. It received no Republican votes in the House of Representatives and only three Republican votes in the Senate. There are repeated statements by Republicans that they would like to repeal the act of they had the opportunity. One of the reasons for Republican opposition is the fact that the act seemed to be a regulatory overreach not warranted by the circumstances. There was a financial crisis, to be sure, but there were many indications that it was the result of U.S. government housing policies and not a lack of regulation. While repeal seems far-fetched at the moment, if the Republicans hold the House and take control of the Senate in 2012, significant modifications in the act are not out of the question. There are good reasons for substantial modification. The act authorizes a Financial Stability Oversight Council—an organization made up largely of the principal federal financial regulators—to designate certain companies as 'systemically important' because their financial distress might cause instability in the U.S. economy. Once this designation is made, these companies are to be regulated and supervised by the Federal Reserve giving that agency enormous power over their capital, liquidity, leverage and activities, and setting up the possibility of a partnership between the Fed and the largest financial institutions in the U.S. In addition, because they have been designated as too big to fail, these companies will have advantages over smaller competitors in obtaining credit, and could drive smaller competitors out of business over time. The act’s restriction on proprietary trading will weaken banking organizations by depriving them of another source of revenue. Finally, the Consumer Financial Protection Bureau has been established in the Fed, but has been made independent of the Fed, the President and Congress, raising questions about its conformity with the normal constitutional scheme.

Suggested Citation

  • Peter J. Wallison, 2011. "Will (Should) Dodd-Frank Survive?," NFI Policy Briefs 2011-PB-02, Indiana State University, Scott College of Business, Networks Financial Institute.
    • Handle: RePEc:nfi:nfipbs:2011-pb-02
    as

    Download full text from publisher

    File URL: http://www.indstate.edu/business/sites/business.indstate.edu/files/Docs/2011-PB-02_Wallison.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Peter J. Wallison, 2011. "Dissent from the Majority Report of the Financial Crisis Inquiry Commission," Books, American Enterprise Institute, number 50848, September.
    2. repec:aei:rpaper:31071 is not listed on IDEAS
    3. repec:aei:rpbook:24944 is not listed on IDEAS
    4. repec:aei:rpaper:26126 is not listed on IDEAS
    5. Raghuram G. Rajan, 2010. "Fault Lines: How Hidden Fractures Still Threaten the World Economy," Economics Books, Princeton University Press, edition 1, number 9111.
    6. Peter J. Wallison, 2011. "A dissent from the majority report of the financial crisis inquiry commission," Proceedings 1118, Federal Reserve Bank of Chicago.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. John A. Tatom & Terrie Troxel, 2011. "A Report to the Federal Insurance Office," NFI Policy Briefs 2011-PB-07, Indiana State University, Scott College of Business, Networks Financial Institute.
    2. Alqatawni, Tahsen, 2013. "The Impact of the Dodd-Frank Act on Small Banks," MPRA Paper 51109, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Charles W. Calomiris, 2019. "How to Promote Fed Independence: Perspectives from Political Economy and History," Journal of Applied Corporate Finance, Morgan Stanley, vol. 31(4), pages 21-42, December.
    2. Adam J. Levitin & Susan M. Wachter, 2013. "Why Housing?," Housing Policy Debate, Taylor & Francis Journals, vol. 23(1), pages 5-27, January.
    3. Robert B. Avery & Kenneth P. Brevoort, 2015. "The Subprime Crisis: Is Government Housing Policy to Blame?," The Review of Economics and Statistics, MIT Press, vol. 97(2), pages 352-363, May.
    4. Veronesi, Pietro & Santos, Tano, 2016. "Habits and Leverage," CEPR Discussion Papers 11681, C.E.P.R. Discussion Papers.
    5. Kenneth P. Brevoort, 2022. "Does Giving CRA Credit for Loan Purchases Increase Mortgage Credit in Low-to-Moderate Income Communities?," Finance and Economics Discussion Series 2022-047, Board of Governors of the Federal Reserve System (U.S.).
    6. Lee, Hyojung & Bostic, Raphael W., 2020. "Bank adaptation to neighborhood change: Mortgage lending and the Community Reinvestment Act," Journal of Urban Economics, Elsevier, vol. 116(C).
    7. Michael Insler & Kurtis Swope, 2016. "School Quality, Residential Choice, and the U.S. Housing Bubble," Housing Policy Debate, Taylor & Francis Journals, vol. 26(1), pages 53-79, January.
    8. Dwight Jaffee & John M. Quigley, 2012. "The Future of the Government-Sponsored Enterprises: The Role for Government in the U.S. Mortgage Market," NBER Chapters, in: Housing and the Financial Crisis, pages 361-417, National Bureau of Economic Research, Inc.
    9. Valentin Bolotnyy, 2014. "The Government-Sponsored Enterprises and the Mortgage Crisis: The Role of the Affordable Housing Goals," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 42(3), pages 724-755, September.
    10. Goodhart, Charles, 2013. "La autoridad macroprudencial: Poderes, alcance y rendición de cuentas," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 25, pages 9-28.
    11. Tano Santos & Pietro Veronesi, 2016. "Leverage," NBER Working Papers 22905, National Bureau of Economic Research, Inc.
    12. Dan Immergluck, 2011. "Critical Commentary. Sub-prime Crisis, Policy Response and Housing Market Restructuring," Urban Studies, Urban Studies Journal Limited, vol. 48(16), pages 3371-3383, December.
    13. Volkova, O., 2018. "Fair Value in Finance: Fifty Shades of Fairness," Journal of the New Economic Association, New Economic Association, vol. 39(3), pages 85-109.
    14. Oliver Denk & Boris Cournède, 2015. "Finance and income inequality in OECD countries," OECD Economics Department Working Papers 1224, OECD Publishing.
    15. Karl Aiginger & Alois Guger, 2014. "Stylized Facts on the Interaction between Income Distribution and the Great Recession," Research in Applied Economics, Macrothink Institute, vol. 6(3), pages 157-178, September.
    16. Roy, Saktinil & Kemme, David M., 2012. "Causes of banking crises: Deregulation, credit booms and asset bubbles, then and now," International Review of Economics & Finance, Elsevier, vol. 24(C), pages 270-294.
    17. Xinhua Gu & Yang Zhang & Xiao Chang, 2017. "The role of financial systems for cross-country differences in the link between income and consumption inequality," Applied Economics, Taylor & Francis Journals, vol. 49(24), pages 2365-2378, May.
    18. Bilin Neyapti, 2018. "Income distribution and economic crises," International Finance, Wiley Blackwell, vol. 21(3), pages 273-296, December.
    19. European Commission, 2013. "Tax reforms in EU Member States - Tax policy challenges for economic growth and fiscal sustainability – 2013 Report," Taxation Papers 38, Directorate General Taxation and Customs Union, European Commission.
    20. Francesco Saraceno, 2014. "L'impact économique des fortes inégalités : problèmes et solutions," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(3), pages 187-200.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nfi:nfipbs:2011-pb-02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ray Thomas (email available below). General contact details of provider: https://edirc.repec.org/data/nfinsus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.