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How To Strengthen Financial Reform In The Next Four Years

Economy Memo Pad

How To Strengthen Financial Reform In The Next Four Years


As part of our series “A Rooseveltian Second-Term Agenda,” an outline of what needs to be done to build upon and safeguard Dodd-Frank.

One of the Obama administration’s biggest vulnerabilities when it comes to its first-term policy legacy was that the roots of the legislation it ushered through wouldn’t take hold until around 2014. Thus if a Republican president took office in 2013, there was a real chance that he could dismantle, or at least strongly interfere with, the new framework for health care and financial regulations. And it was clear by 2010 that movement conservatives would make the repeal or collapse of both bills a litmus test for all Republicans in office.

But with President Obama’s victory last week, the core framework of Dodd-Frank, the financial reform bill he signed in 2010, will become the law of the land. The question now is how to best push it forward in the coming months and years.

The most sensible, immediate reform would be to give regulators the adequate resources necessary to do their jobs. The Commodity Futures Trading Commission had its funding cut by both parties last year in a move that will make their crucial work even harder to accomplish. The GOP is aiming to remove the independent funding stream for the Consumer Financial Protection Bureau. Without decent resources, it is unlikely that financial reform will be carried out effectively.

The next goal will require new reforms to draw some lines on the issues that haven’t been implemented well after the initial passage of the law. The Volcker Rule continues to be a mess while rules are being written. There isn’t a clear vision for what important new offices like the Office for Financial Research will set out to accomplish. These are major pieces of the legislation and are essential to creating fair, accountable, and transparent markets.

Fleshing out the post-Dodd-Frank agenda is also crucial. What should the proper regulations, if any, of high-frequency trading look like? Is breaking up the banks necessary for eliminating Too Big To Fail and the power of the financial firms over the markets, as a larger chorus of experts is starting to argue? How important is the government in preserving middle-class access to a 30-year fixed-interest-rate mortgage loan?

Fighting off a bipartisan effort to make Dodd-Frank more industry-friendly will continue to be a full-time battle. But even though we don’t have to worry about the party in power repealing what has already been put into place, there’s no excuse for neglecting to articulate a vision for a financial sector that serves the greater interests of the real economy.

Mike Konczal is a Fellow at the Roosevelt Institute.

Cross-posted from The Roosevelt Institute’s Next New Deal blog

The Roosevelt Institute is a nonprofit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

Photo by “mlmdotcom” via Flickr.com


  1. greghilbert November 17, 2012

    Dodd-Frank was a baby-step and the Consumer Financial Protection Bureau is toothless window-dressing. Government and both parties serve the financial industry. FDR would be appalled at today’s state of affairs.

  2. TEN-OF-WANDS November 17, 2012

    Better OBAMA than some foreign agency, such as the Shanghai Cooperation Organization.

  3. onedonewong November 17, 2012

    Another example of unelected regulators able to pass new rules and regulation to hamstring the economy. This is the longest running recession since the great depression…why??? because barak and his bureaucrats are averaging 60 new regulations a week that are hamstringing business from investing

    1. Bill November 19, 2012

      Name 5 new regualtion that have been passed in the last week. You know you can’t because there haven’t been any. Tell dummy how regulating CDO’s (do you know what they are?) and other types of derivatives that get traded off of any recognized market is abd for the country. There are numerous types of securities that are used by Wall Street tha are not based on any type of company or collatreral. The SEC controls most of the Wall Street business and the stock markets are doing very well since President Obama took office. Lest you forget the recession started under GW Bush moron.

      1. onedonewong November 19, 2012

        Name 5 there was 35. A simple google search will tell you what they were but as usual a lib posts without a modicum of intellectual curiosity, The recession moran STARTED when the Dems took over congress in 2007 and passed onerous regulations that caused businesses to stop hiring.
        The housing market plunged because of Franks and Dodds community reinvestment act that required them to make bad loans
        Time to get your information some where other than your Messiah

  4. irishtap November 18, 2012

    Agencies can’t protect us from these vampires with one arm tied behind it’s back. Agencies must be fully funded in order to give rules and regulations needed CEO chewing teeth. Until these corporate sociopaths fear the prison cell they will continue to game the system. .


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