News: In the News
Four myths in the battle over Dodd-Frank
Kate Berry, American Banker
In their drive to revamp the Dodd-Frank Act, Republicans have repeatedly asserted that the 2010 financial reform law has increased the cost of consumer lending and cut off access to credit.
"Thanks to Dodd-Frank’s red tape, consumers pay more for mortgages, credit cards and auto loans — that is if consumers can even get access to them," House Financial Services Committee Chairman Jeb Hensarling said in a typical recent speech.
Yet the available data indicates otherwise. Consumer credit has roared back in the six years since Dodd-Frank, with a 46% jump in outstanding consumer credit to $3.8 trillion, according to recent Federal Reserve data.
"The best available data just don't support their claims," said Marc Jarsulic, vice president of economic policy at the Center for American Progress and a former chief economist for the Senate Banking Committee.
It is plausible that lending in recent years was weaker than it would otherwise have been without the sundry regulatory costs imposed by Dodd-Frank, which have likely been a contributing factor in bank consolidation since the law's passage.
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