Dodd-Frank Harms Main Street

“Consumer Protection Act” helps big business, hurts consumers: NCPA


Source: NCPA

Dodd-Frank is reducing access to credit for small business and limiting choices for consumers, according to a new National Center for Policy Analysis study by Competitive Enterprise Institute VP of Strategy Iain Murray.

“Dodd-Frank was intended to protect Main Street and consumers from financial predation by Wall Street,” says Murray. “Instead, the law has handicapped small businesses and consumers, while doing little to punish the main culprits in the 2008 financial crisis.”

According to the report, Dodd-Frank has harmed consumers by:

  • Raising the cost of insurance. According to an April 2013 study, the Orderly Liquidation Authority, the organization which gives the Treasury Secretary the power to liquidate any financial company and enables the Financial Stability Oversight Council to suspend bankruptcy laws, could raise consumers’ aggregate life insurance premiums by $3 to $8 billion a year.
  • Reducing the number of banks. Small banks are capsizing under the hefty weight of Dodd-Frank’s burdensome regulations. IN order to meet these regulations, small banks must either increase their compliance departments, merge with other banks, or close altogether – all of which ultimately cost the consumer in fees or resources.
  • Raising consumer fees. According to the study, every dollar spent on regulatory compliance reduces the money available to creditworthy borrowers by up to 10 dollars. Consumers have seen their average monthly fees double, and have begun turning to alternative financial services, including prepaid debit cards, payday lenders and check cashing shops.

“Many of the rules issued under Dodd-Frank have harmed some of the poorest Americans, who have seen their insurance made more expensive, their banking choices reduced and their bank fees increased,” says Murray. “In the meantime, the bankers of Wall Street can sleep easy knowing that they can raise capital more cheaply thanks to their SIFI designation, and regulators know that a good, high-paying job awaits them in compliance departments there.”

How Dodd-Frank Harms Main Street

The National Center for Policy Analysis (NCPA) is a nonprofit, nonpartisan public policy research organization, established in 1983. We bring together the best and brightest minds to tackle the country's most difficult public policy problems — in health care, taxes, retirement, education, energy and the environment. Visit our website today for more information.