In the aftermath of the global financial crisis, the United States passed the Dodd-Frank bill, one of the Obama administration’s key legacies. The legislation increased regulation of U.S. banks.
It was aimed at preventing another financial crisis. Most agree it has changed things on Wall Street, but there is much debate on whether it has been for the better or the worse.
CCTV America’s Karina Huber has more.
When U.S. President Barack Obama signed the Dodd-Frank bill into law, he promised the new regulation would change the way Wall Street does business.
The ultimate goal was to prevent a repeat of the global financial crisis and a bailout of the banks.
But six years later, many U.S. banks are still too big to fail. Experts said their collapse would pose a systemic risk to the global economy. According to Columbia Law Professor John Coffee, Dodd-Frank has made it less likely the banks will fail.
Prohibiting banks from taking risky bets and requiring them to have a bigger cushion if they run into trouble has made U.S. banks less profitable. As a result, the industry has been shrinking. It has also become harder for people to get loans.
Some worry the changes make U.S. banks less competitive globally.
Industry lobbyists and many Republican congressmen pushed hard against the Dodd-Frank financial reform law throughout its implementation. If Trump, the Republican nominee, were to take control of the White House, the bill would lose a powerful ally and analysts say Wall Street could go back to doing business like it did before the financial crisis.
Graciela Chichilnisky and John Allison discuss the Wall Street reform
To further discuss the pros and cons of the Dodd-Frank Bill in regulating Wall Street and how both presidential candidates will address Wall Street reform, CCTV America’s Michelle Makori spoke with John Allison, CEO of Union Capital, as well as Graciela Chichilnisky, professor of Economics and Statistics at Columbia University.