Home > Personal Finance > Dodd-Frank Turns 5 & Not Everyone’s Happy About It

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Has financial reform been a sterling success or a terrible failure? Expect to hear a lot of opinions and posturing on the subject this month. July marks five years since Congress passed the most sweeping financial reform legislation since the Great Depression. The public reviews of what’s known as the Dodd-Frank reforms begin in earnest on Thursday when the House Financial Services Committee holds a hearing titled “Dodd-Frank Five Years Later: Are We More Stable?” Chairman Jeb Hensarling (R-Texas), is ready with his answer.

“Never before has more unchecked discretionary authority been given to unaccountable government bureaucrats,” he wrote while announcing the hearing. “Regrettably, the result is less freedom, fewer and more expensive choices, and reduced upward mobility for low and moderate income Americans.”

That perspective is out of step with the majority of Americans, says advocacy group Americans for Financial Reform. Together with the Center for Responsible Lending, the group beat the House Financial Services Committee to the punch, releasing a poll on Tuesday which shows there is widespread support – even among Republican voters — for Dodd-Frank and the Consumer Financial Protection Bureau it created.

The group says 91% of Americans agree that it is important to regulate financial services and products to make sure they are fair for consumers. By nearly a 3:1 margin, voters want to see more, not less, oversight and regulation of financial companies, the survey found, and fewer than a quarter believe tough regulations on Wall Street will hurt the U.S. economy.

Both Republicans and Democrats support the CFPB, though Republicans less so, the group says. When asked to agree that either the CFPB is needed to regulate banks, or the CFPB is another “bureaucracy we don’t need,” 85% of Democrats and 66% of Republicans supported the CFPB.

“Everybody talks about polarization in America. Well, if you are looking for an issue with bipartisan consensus in real America … you find it in financial reform,” said Celinda Lake of Lake Research, which conducted the survey of likely American voters in recent weeks.

Results have remained steady from past years’ surveys, Lake said, suggesting to her that Americans’ opinions on financial regulation have become a “core attitude.”

Dodd-Frank went far beyond creation of the CFPB, however. It’s such a massive overhaul of the banking systems that it’s hard to boil the law down to a single up or down sentiment. Law firm Davis Polk, which specializes in helping firms track Dodd-Frank regulations, has an online tracker which indicates that even after five years, only 238 of the 390 required rule-makings have been completed.

“Whether we like it or not, Dodd-Frank is the single most sweeping rewrite of our financial services laws since the New Deal. We would be negligent if we did not constantly monitor its implementation and impact,” Hensarling, the Republican House member, said.

The opinion you can expect to hear from Republicans on Thursday, and at two other Congressional five-year anniversary hearings scheduled this month, is that Dodd-Frank has failed to deliver on core promises like ending “too big to fail” and increasing financial stability.

“Instead, five years later the big banks are bigger, the small banks are fewer and the economy remains moribund,” Hensarling said. “Low- and moderate-income Americans have lost free checking, seen small business lines of credit evaporate, and it’s now harder for them to achieve financial independence.”

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