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Weekly Column: Dodd-Frank: Five Years Later

We recently marked the five-year anniversary of the enactment of the Dodd-Frank Act. At the time, supporters of Dodd-Frank said it would improve our economy and protect taxpayers from “too big to fail” financial institutions. Instead, our economy remains stuck in a rut and the law has plagued our country with burdensome new federal mandates. The 456 final rules enacted since the passage of Dodd-Frank have so far unleashed a bureaucratic nightmare, the cost of which is being handed down directly to the American people.

According to the American Action Forum, these rules have cost Americans $24 billion in compliance costs and burdened job creators with 61 million new hours of paperwork. It would take close to 30,000 Americans working 40-hour weeks for an entire year to finish that much paperwork, and the salaries of more than half a million Americans to pay for those compliance costs.

South Dakota’s banking industry has been hit hard by this, spending too much time and money on regulatory compliance. Smaller banks may not be able to survive and may simply have to sell to bigger banks. At a Senate Banking Hearing, we heard from one bank that because of Dodd-Frank, now employs more compliance employees than actual loan officers. This is not only costly to the banks themselves, but also to the customers who do business with a bank. Compliance costs have to be made up somewhere, so banks have been reducing the interest rates on deposits and have increased fees for previously free services like checking accounts and online banking. Literally everyone who has a bank account is feeling the negative effects.

I have introduced amendments and legislation to take apart provisions of Dodd-Frank. One of my amendments, included in this year’s budget resolution, would provide help for people in rural areas seeking a mortgage to purchase a home. Additional legislation would repeal the so-called “pay ratio” rule in Dodd-Frank.  This redundant provision requires companies to recreate already available public information on employee salaries. These are examples of why the entire law needs to be re-examined and changed so that we can truly recover from the financial crisis of 2007 and 2008 and not continue to bog down our job creators with overly burdensome federal mandates.

As a member of the Senate Banking Committee, I have been working with others to change our banking regulations. Earlier this year, we passed S. 1484, The Financial Regulatory Improvement Act of 2015, that would provide much-needed regulatory relief to the financial services industry and the consumers they serve. I also recently introduced S. 1816 with Sen. Roy Blunt (R-Mo.) to help strengthen community banks, particularly those in rural areas. 

Dodd-Frank has many flaws which are limiting American growth and productivity. In the five years since Dodd-Frank was enacted, it has placed undue burden on our economy, failed to protect taxpayers from future bailouts of the financial industry and unfairly punished South Dakota consumers who bear the brunt of the increased compliance costs. I will continue to work with my colleagues in the Senate to promote legislation that helps reduce red tape and overregulation. These regulations are hurting our economy and adding costs for consumers. 

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