Dodd-Frank reforms need a fix, not repeal

President Donald Trump’s administration and House Republicans want to roll back financial reforms and return us to the free-for-all system that led to the panic of 2008 and the Great Recession.

Dodd-Frank set out to solve a very real problem. It definitely needs improvement, but it should not be repealed.

We shouldn’t be surprised, given Trump’s aversion to government regulation. But it is a marvel just the same.

The House voted on straight party lines June 8 to repeal the Dodd-Frank Wall Street reforms signed into law by President Obama in 2010. A Treasury report also recommended gutting them.

Fortunately, Majority Leader Mitch McConnell doesn’t have the votes to finish the job in the Senate.

This presents a golden opportunity for a bipartisan bill that pulls back the regulatory overreach without abandoning consumers.

DoddFrank definitely needs improvement. But like the Affordable Care Act, it set out to solve a very real problem. It needs fixing, not repeal.

The U.S. banking system collapse in 2008 was epic.

Housing prices fell by more than 30 percent as unemployment soared.

Many of the world’s biggest banks would have imploded without a massive federal bailout.

Consumers, not Wall Street executives, took the brunt of this, losing more than $1 trillion in assets.

Many never recovered financially.

Dodd-Frank was supposed to prevent that from happening again. In some ways, it’s working.

The economy has stabilized, the unemployment rate has plunged and the banking industry has prospered.

The Federal Reserve reports that the top 30 U.S. banks have added about $700 billion in capital since the collapse, and commercial and industrial loans are at an all-time high.

This is why most large banks actually favor retaining Dodd-Frank, which force them to maintain a higher level of capital on hand to guard against downturns. They know it helps prevent a repeat of 2008.

It’s smaller, community banks that need help — the ones that finance the small businesses that power the economy.

Dodd-Frank has been excessively hard on small banks. Nearly 15 percent have closed since 2011.

Remedies include giving greater flexibility in the types of loans they can offer and easing some reporting burdens that now overwhelm banks with small staffs.

The Consumer Financial Protection Bureau is a centerpiece of Dodd-Frank, and Wall Street hates it.

The House legislation guts the agency’s power to police unfair practices and eliminates oversight of often predatory payday loan market.

The Senate needs to preserve oversight or any rules will be meaningless.

The uproar over Russia, health care reform and other emotional issues are grabbing the spotlight these days.

But eliminating Wall Street reforms will have a direct effect on consumers and the economy over time.

If you enjoyed the Great Recession, the House bill is for you. If not, tell the Senate to fix the obvious flaws in DoddFrank instead of rolling back the clock to 2008.

— San Jose Mercury News, Digital First Media

Dodd-Frank was supposed to prevent disaster from happening again. In some ways, it’s working. The economy has stabilized, the unemployment rate has plunged and the banking industry has prospered.