Are largest banks getting a Dodd-Frank pass? You bet.

November 18, 2013 at 7:47 am 1 comment

People are justifiably outraged by the incompetence with which the Government has rolled out the Affordable Care Act.  From cancellation notices to botched websites, the Government has played right into the hands of those who argue that it isn’t competent enough to get too involved in people’s lives.

But what I am more than a little bemused by is why the American public hasn’t saved at least a little of its outrage against the elected officials and regulators who have done next to nothing to address the core issues that led to the financial crisis.  Millions of people were thrown out of work as a direct result of activities carried out by some of our largest banks and more than five years after the meltdown began, the Government has still not done enough to implement even the relatively modest reforms Congress was able to agree to.

This is not blogger hyperbole. The GAO concludes in the first of two reports it will be releasing analyzing Government support for the largest bank holding companies, that while agencies have made progress, key regulations intended to limit the “too big to fail” safety net for our largest banks have yet to be fully implemented (  In addition, it is yet to be determined how effective these regulations will ultimately be even if they are implemented.

Isn’t it great that there’s more of a political consensus, at least within the Republican Party, for cutting food stamps and unemployment benefits than there is to making fundamental changes to the way our largest banks are regulated?  If you really believe in the free market, then the only way to truly regulate these behemoths is to put their share holders and executives on notice that they are not too big to fail.  According to the GAO, the largest four U.S. holding companies each had at least 2,000 separate legal entities as of June 30, 2013.  Does anyone really think an entity that big can be effectively managed, let alone regulated?  Does anyone really think that if these banks are allowed to stay this large that they will be allowed to fail if and when they mess up again?

Meanwhile, credit unions, and to be fair, many small banks, are bombarded with a never-ending supply of CFPB initiatives.  Something’s not right here.  I’ve said this before, and I’ll say it again.  No credit union or bank should be subject to any new regulations issued by the CFPB until all the Dodd-Frank provisions and regulations intended to be imposed on the nation’s largest financial institutions are actually implemented and operational.  I know this could never happen, but even getting a proposal like this introduced would show just how much the country has missed he mark with it comes to cleaning up the financial industry.

Entry filed under: Compliance, Regulatory. Tags: , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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