Republicans, who were always against the law that was passed in 2010 passed after the last recession, now finally are in power to repeal it. The chairman of the House Financial Services Committee Representative Jeb Hensarling launched a protracted fight on Wednesday over easing the banking regulations by rewriting the Dodd-Frank financial reform law.
President Trump had promised in its campaign trail that if he comes to power he will dismantle Dodd-Frank. Though the bank and the financial firm executives are looking forward to rewriting certain clauses, they are virtually against abolishing it altogether.
Speaking on it during a hearing before the House Financial Services Committee, Hensarling said that if the legislation he is proposing is passed it would mean that the banks could not rely on taxpayers for bailouts and that is perhaps the reason that most of the Wall Street banks are opposing it.
The biggest overhaul after the financial crisis in 2010 has helped the big banks while the small community banks that were not involved in causing the financial crisis in any ways were imposed with regulations. Putting across his case Hensarling said, “We were told it would lift our economy, but instead we are stuck in the slowest, weakest, most tepid recovery in the history of the Republic. We have seen millions who remain unemployed and underemployed and an economy working at roughly half of its potential.’’
He argued that this bill would lift the burdensome regulations, thus helping in unleashing the markets. It offers nearly 6000 banks a choice to get rid of regulatory burdens that were imposed then and for that they need to increase their emergency financial cushioning.
The big banks are against the abolition of the Dodd-Frank law. James Gorman, the chief executive of Morgan Stanley said, “We have redesigned the way in which large financial institutions in this country function and reworking those regulations would add new uncertainty. I would not start again. That’s a terrifying thought to start again, because what’s going to replace it?’’
The Democrats who were responsible for bringing in Dodd-Frank law feels that the Hensarling’s bill has a lot of taking for the Wall Street. This bill not only weakens the Consumer Financial Protection Bureau, but also repeals the Volcker rule. This rule prohibits the big banks from making risky financial bets, thus safeguarding the interests of the consumers.
The Trump administration is in the process of easing the regulations on the banking industry and this bill is a part of it.