Over the years it has often seemed to this writer that C-SPAN preferred to leave the financial crisis story to the business channels. Thus it was a pleasant surprise to find Rep. Michael Capuano, D-Mass., as a guest on Washington Journal to talk about this very subject — financial regulation and the Dodd-Frank Act five years after Dodd-Frank was enacted.
This writer predicted Dodd-Frank would never be implemented, that rather the implementation process would become a process by which any interest group that had not already gained exemption from the Act could achieve it and it would be neutered in the same way that previous landmark bills that were supposed to solve the financial crisis were rendered inoperative under protracted assault by industry lobbies compounded by neglect on the part of compliant financial regulators.
Capuano is an especially fortuitous choice, because he and his Massachusetts Democratic colleague Stephen Lynch are consistently among the most active and best prepared members of the House Financial Services Committee and most likely to depart from industry talking points. The congressman was interviewed by host Greta Wodele Brawner, who immediately noted the anniversary and asked Capuano what the impact of Dodd-Frank has been.
In response, Capuano said, "It's still evolving. I actually think it's been a good law overall. There've been some bumps in the road. Some of it has not yet been fully implemented, but overall I think it's done a reasonable job. It will be better if we get some better regulations finalized, and I think if we can clean up a handful of things, it will be better. Overall it's done a very good job. It's kept the markets relatively stable and recovering."
Brawner followed up with by asking Capuano what he thinks needs to be clean up in Dodd-Frank. He listed "minor things around the edges" involving insurance companies and other things he said would be "easy to do if we can get by some partisan issues that have stood in the way." Not to be diverted, Brawner asked what those issues are, and Capuano mentioned the desire by some to repeal the entire law, which Democrats will prevent, and insurance capital standards, which Capuano expects Republicans to "keep tying it up with unrelated items."
Former Federal Reserve Chairman Paul Volcker has called for an overhaul of the entire system of financial regulation, as Brawner quoted, "The system for regulating financial institutions in the United States is highly fragmented, outdated and ineffective. A multitude of federal agencies, self-regulatory organizations and state authorities share oversight of the financial system under a framework riddled with regulatory gaps, loopholes and inefficiencies."
Capuano agreed and added, as this writer would have, that this state of affairs has existed for all of our lives, but then he said that while Dodd-Frank collapsed a few agencies, "You can't do everything overnight."
Asked to elaborate on what's outdated, he cited the separation of the Securities and Exchange Commission and Commodity Futures Trading Commission, which some observed have long suggested should be combined.
Asked about tightness in the mortgage market, Capuano said some people should not be buying houses.
He then called for loosening regulation of community banks, a common theme of legislators of both parties, many with close ties to the industry. He agreed with Brawner that banks still have an incentive to sell mortgages into the secondary market rather than to hold them in their portfolios.
Capuano predicted that Congress would deal with issues raised to high-frequency trading "over the next several years."
(Archived video can be found here
© 2022 Newsmax Finance. All rights reserved.