Just a Few of the Reasons Why the Dodd-Frank Act is a Nightmare for Consumers

Sadly, I am afraid this list will grow as we continue to “see whats in the bill”  now that its been passed.

1.  The Volcker rule.  This  is a confusing rule.  Basically the rule would generally ban proprietary trading – transactions in which banks use federally insured deposits and other funds to supplement their earnings. Ratings agency Standard & Poor’s estimated the rule collectively could cost U.S. banks as much as $10 billion annually.   Also, this rule means that banks cannot invest in their own funds.  Therefore, banks will earn less and charge consumers more to make up the difference.   

2.  Consumer Financial Protection Bureau (CFPB) .  CFPB has been very busy bureau with  restructuring the mortgage market; devising restrictions on credit bureaus, education loans, overdraft policies, payday lenders, credit-card plans and prepaid cards; and amassing an a terrifying  database on all manner of consumer spending.   This so called protection bureau will raise fees to consumers,  reduce individual privacy, and make it extremely more difficult for individuals to get credit cards or loans.

3. Financial Stability Oversight Council has been created and charged with designating specific firms as “systemically important financial institutions.”      When Obama signed Dodd-Frank  he pledged that “the American people will never again be asked to foot the bill for Wall Street’s mistakes…. There will be no more tax-funded bailouts — period.”      As of now, the council just proposed that GE Capital,  Prudential Financial, and American International be deemed “systemically important financial institutions”.   In fact, the taxpayer “safety net” for these big firms is bigger than ever.   Can you say bail out?

4.  Community Banks will begin to disappear because they cannot absorb the cost of compliance to  over 400 new rules and mandates.   This will really hurt the economic growth of rural areas since this is where the majority of community banks are located.

5.  More fees.  Dodd–Frank will extract at least $ 27 billion in new fees and assessments on financial firms, according to the Congressional Budget Office. It will require more than 2.2 million annual labor hours to comply with the first 10% of rules issued.  Guess who will ultimately pay those costs?   Yep.  Consumers.

6.  Higher Mortgage Fees and Tougher Lending  Guidelines.  Mortgages and and other loans will likely be costlier. This will affect everyone .  However, the moderate-income borrowers with be hit the hardest.   The  new regulations  have a very narrow criteria for a “qualified” mortgage.

The law gives way too much power to the Federal Government and these agencies are not accountable to anyone-not even to Congress appropriations.   The law actually states  that agencies “may” issue rules or shall issue rules as they “determine are necessary and appropriate.”       That statement alone should give all Americans pause.

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