The Federal Deposit Insurance Corp. reports that 1,341 commercial banks have closed since 2010, but only two new ones have been chartered, compared to the approximately 2,500 that started in the 25 years before the Great Recession. He says community banks have hired 50 percent more compliance officers to deal with Dodd-Frank while the industry itself has only increased employment by five percent.
Before Dodd-Frank regulators were generally responsive to Congress which controlled appropriations thereby instilling a series of checks and balance within the system. Dodd-Frank, however, has given regulators the right to set rules on their own, which creates an air of uncertainty among lenders, leading to an overall pullback on lending.
While bipartisan commissions implemented rules in the past, the Consumer Financial Protection Bureau (CFPB), authorized by Dodd-Frank, is under the wing of the Federal Reserve and not in the least beholden to Congress for appropriations or any kind of regulation. It’s funding is automatic, away from the scope of elected officials. Its authority extends to banning services and products offered by financial institutions, a determination left in the the past to the Federal Trade Commission (FTC) and the courts. The rules are now whatever the regulators say they are, as MHProNews understands.
Gramm says, “Most criticism of Dodd-Frank focuses on its massive regulatory burden, but its most costly and dangerous effects are the uncertainty and arbitrary power it has created by the destruction of the rule of law. This shackles economic growth but more important, it imperils our freedom.”
For the relevance of former Sen. Gramm’s words to manufactured housing, please click here.##
(Image credit:bloombergbusinessweek)
