The regulatory behemoth Dodd-Frank created the Consumer Financial Protection Bureau (CFPB) based on the false notion that the financial crisis happened due to lack of consumer protections. In order to “fix” this problem, Dodd-Frank transferred enforcement authority for 22 specific consumer financial protection statutes to this new agency.
The truth is, banks, and all firms for that matter, were subject to consumer protection rules even before Dodd-Frank. In a recent House Financial Services hearing, Rep. William Lacy Clay of Missouri, the top Democrat on the committee, made exactly the same point.
Clay’s statement acknowledges that Dodd-Frank was a solution in search of problem--placing the massive deregulation fallacy, used by many to push through the law, flat on its face.
Dodd-Frank does little to fix the problems that existed prior to the 2008 collapse and does less to prevent a future collapse. Congress should repeal Dodd-Frank and enact financial regulatory reform that would benefit both creditors and consumers.