NCPA - National Center for Policy Analysis

Dodd-Frank Harms Main Street

September 25, 2015

Wall Street Reform and Consumer Protection Act -- popularly known as Dodd-Frank named after its main sponsors -- were intended to protect Main Street and consumers from financial predation by Wall Street. Instead, the law has reduced access to credit for small businesses and has resulted in fewer choices for consumers, while doing little to punish the main culprits in the financial crisis.

Officials sold the Dodd-Frank Act to the American people as promoting financial soundness and stability by reining in Wall Street and the big banks. Instead, much of Dodd-Frank is a broad enabling act granting power to executive-agency bureaucrats to write specific regulations outside the checks-and-balances oversight governing the rest of the federal government.

  • Dodd-Frank raises the price of insurance.  An April 2013 study by the consultancy Oliver Wyman found that the OLA would raise consumers' aggregate life insurance premiums $3 billion to $8 billion a year, with the bulk affecting retirees.
  • Dodd-Frank reduces the number of banks. Two thousand community banks and credit unions have closed or merged since 2010, with community banks being hit hardest.
  • Dodd-Frank raises user fees. The average minimum monthly holding requirement for no-fee banking tripled from $250 to $750.  These fee increases made the banking system too expensive for about a million people, largely from the poorest sectors of society.

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. The rules have forced many out of the banking system altogether, thanks to Dodd-Frank's "consumer protection" provisions. In the meantime, the bankers of Wall Street can sleep easy knowing that they can raise capital more cheaply, and regulators know that a good, high-paying job awaits them in compliance departments there.

Source: Iain Murray, "How Dodd-Frank Harms Main Street," National Center for Policy Analysis, September 2015.


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