Skip to main content
Three years ago, on July 21, 2010, President Obama signed into law the Wall Street Reform and Consumer Protection Act or, as it’s more commonly known, Dodd-Frank. Created in response to the 2008 crash of the financial markets, Dodd-Frank was supposed to curb the various Wall Street practices that led to the crisis in the first place.
But has it?
In an article titled How Wall Street Defanged Dodd-Frank, reporter Gary Rivlin reveals that the financial industry has spent more than $1 billion on hundreds of lobbyists who are steadily working to chip away at Dodd-Frank in the three years since its passage. The end result: Most of the reforms created under Dodd-Frank have not been implemented, meaning today’s financial system is no less vulnerable to repeating the crash that occurred in 2008.
Rivlin recently appeared on an episode of NPR’s Fresh Air. Among the highlights are interesting tidbits of information on the efforts being undertaken by Wall Street to slow down the implementation of the Dodd-Frank bill. Case in point: In 2012, the top 5 consumer protection groups defending Dodd-Frank – AFSCME, the Center for Responsible Lending, U.S. Public Interest Research Group, Americans for Financial Reform and the Consumer Federation of America – sent 20 lobbyists to Capitol Hill. That same year, the top 5 finance industry groups trying to destroy Dodd-Frank – the U.S. Chamber of Commerce, American Bankers Association, JP Morgan Chase, Wells Fargo and Goldman Sachs – sent 406 lobbyists to Capitol Hill.
Indeed, consumer advocates are no match for Wall Street money. Commercial banks such as Wells Fargo, Citigroup and JPMorgan Chase, along with their trade groups, spent $55 million lobbying in 2010 (the year Dodd-Frank became law), and collectively spent $61 million in 2011 and again in 2012. By comparison, consumer protection groups, including AFSCME, the Center for Responsible Lending, U.S. Public Interest Research Group, and the Consumer Federation of America spent a combined $1.1 million on lobbyists over the past three years.
“How do you compete when one side is this hydra-headed monster that can devote unlimited resources to killing, gutting or otherwise weakening financial reform?” asks Dennis Kelleher, a former corporate lawyer who now runs a small nonprofit group focusing on stronger financial regulations, in Rivlin’s article.
The money spent on lobbying translates into key face time with regulatory agencies. The top 5 consumer protection groups have met 116 times with those agencies since the passage of Dodd-Frank. The top five commercial banks met 901 times.
Meanwhile, the stock market is hitting new highs and the banks are selling the very same risky amalgams of mortgages and loans that were sold during the financial boom, as well as and minting more “arcane-sounding financial products” like the kind that doomed the economy only five years ago, according to a recent New York Times article. The bottom line: We are still threatened by the same dangers that brought the global economy to its knees just a few short years ago.
“It’s like a horror movie, and the beast hasn’t been killed yet,” said John Parsons, a senior lecturer at MIT’s Sloan School of Management, in Rivlin’s story. “You can’t be too triumphant just because the first blows had the beast weakened.”
You can read Rivlin’s fascinating story, How Wall Street Defanged Dodd-Frank, in the May 20 edition of The Nation.