“…Title II of the act (Dodd Frank), contrary to Prof. Blinder’s account, doesn’t apply to banks at all, but only to nonbank financial firms. Banks are specifically excluded from the title and left to resolution by the FDIC. The FDIC doesn’t have the resources, financial or otherwise, to keep open a failing trillion-dollar bank and of course cannot sell it to a healthy trillion-dollar bank—the agency’s usual tack—without making the TBTF problem worse. So the only recourse under Dodd-Frank is a taxpayer bailout…

…It’s important to read the statute, and a good reason – as House Financial Services Committee Chairman Jeb Hensarling has just proposed – to open Dodd-Frank and start over. Peter J. Wallison, American Enterprise Institute, Washington

“I would encourage your to read all of the WSJ Letters to The Editors, below.”, Mike Perry, former Chairman and CEO, IndyMac Bank

June 14, 2016, Opinion, The Wall Street Journal

Opinion

Dodd-Frank Hasn’t Eliminated TBTF Banks

The reason the administration doesn’t “trumpet” Dodd-Frank’s elimination of too-big-to-fail is simple: the act doesn’t do that.

In answer to Alan Blinder’s “Why Trump, the ‘King of Debt,’ Hates Dodd-Frank” (op-ed, June 7): The reason the administration doesn’t “trumpet” Dodd-Frank’s elimination of too big to fail is simple—the act doesn’t do that. Not even close. Title II of the act, contrary to Prof. Blinder’s account, doesn’t apply to banks at all, but only to nonbank financial firms. Banks are specifically excluded from the title and left to resolution by the FDIC. The FDIC doesn’t have the resources, financial or otherwise, to keep open a failing trillion-dollar bank and of course cannot sell it to a healthy trillion-dollar bank—the agency’s usual tack—without making the TBTF problem worse. So the only recourse under Dodd-Frank is a taxpayer bailout. It’s important to read the statute, and a good reason—as House Financial Services Committee Chairman Jeb Hensarling has just proposed—to open Dodd-Frank and start over.

Peter J. Wallison

American Enterprise Institute

Washington

Prof. Blinder’s accusing Donald Trump of “cozying up to the big bankers” for donations fails the smell test because last I heard, it was Hillary Clinton who was taking millions from Goldman Sachs and other large banks for speeches, while Wall Street writes huge checks to her presidential campaign.

Further, I haven’t met anyone yet who feels “safer” as a result of the Consumer Financial Protection Bureau or Dodd-Frank. I do know the government has hired an army of regulators, while large financial institutions have hired an army of compliance experts in an attempt to reduce 10-digit fines, lawsuits and other penalties reported in the news daily. This isn’t economically efficient, doesn’t create wealth or productivity and doesn’t keep us “safer.”

Had the Clinton administration not pushed mortgages on people who couldn’t afford them in the ’90s, we wouldn’t have had the 2008 debacle. Dodd-Frank will not fix this and like ObamaCare is an aggressive play by the Democratic Party to take over and regulate a large segment of the economy, grow government payrolls, regulatory power and Democratic Party contributions—all at the expense of consumers, taxpayers and small businesses.

Does Prof. Blinder understand that big banks can afford regulatory armies while community banks cannot? Does Secretary Clinton offer sympathy for the community banks the country is losing at the rate of one a day? Small businesses are losing their funding mechanisms and can’t get a loan. Big banks are bigger than ever, while small banks have shrunk or vanished. In November 2015, there were 1,524 fewer banks with assets under $1 billion than in June 2010—a 20% decline. What a roaring success!

Dodd-Frank has brought us this and much more, but it hasn’t brought us additional security. And it’s just getting started.

Lad Dilgard

Galena, Ohio

Alan Blinder states that Dodd-Frank was passed to “ensure that we never have a repeat of . . . the disgraceful practices that led up to” the financial catastrophe of 2008. I was not aware of it, but I am so glad to hear that Rep. Frank included in his signature legislation a provision that forbids future Democratic senators from “rolling the dice on the housing market.”

Mark McAllister

Johnston, Iowa

 

Posted on June 30, 2016, in Postings. Bookmark the permalink. Leave a comment.

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