Analysis: Trump's Dodd-Frank Rollback and the 'Little Guy'
What’s the effect on ordinary consumers?
— The ABC News Fixer -- Dear Readers:
The ABC News Fixer works for the little guy.
When this column helps someone who got overcharged on their cell phone bill or was underpaid on their insurance settlement, politics never enters into it.
Having trouble with your mortgage? Bumped from a flight? Movers broke your furniture? Those are problems we all can relate to.
But what to make of the news from Washington?
Well, sometimes political actions can have big consequences for consumers.
The Fixer sees it in the letters that arrive every day from ordinary Americans – both here at ABC News and at my prior job at a major newspaper. During and after the Great Recession of 2007, letters flooded in about “underwater” mortgages, out-of-control student debt and bank fees that hit poor and middle class consumers especially hard.
This week, the legislation on everyone’s lips is “Dodd-Frank.” President Trump has called it a “disaster” and promised, “We're going to be doing a big number on Dodd-Frank.”
But what actually is Dodd-Frank, and how might “doing a big number” on it affect the little guy?
Dodd-Frank, or more properly the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in 2010 after the historic financial system meltdown and subsequent government bailout.
All of us little guys remember the $600 billion bailout. (The federal government made the money back and then some -- but no one wants to go through that again.)
Preventing another meltdown was the goal of Dodd-Frank.
The biggest change in banking regulation since the Great Depression, the law increased capital requirements for banks, set up a powerful oversight panel to watch for signs of instability, and under the “Volcker Rule” prohibits banks from making certain types of speculative investments like those that led to the financial crisis.
Six and a half years later, Trump and most Republicans say the regulations go too far.
They say Dodd-Frank is making it difficult for businesses to get the loans they need to grow. They blame regulation for stifling the financial sector and holding back the economy. Democrats defend the regulations as necessary protections.
But, in additional to those controversial provisions, Dodd-Frank also has a lot in it to protect the little guy.
It’s why we have a Consumer Financial Protection Bureau, which at the tender age of five is just hitting its stride. The bureau handles consumer complaints about banks, payday lenders, mortgage and student loan services, debt collectors and other financial companies.
Many of The Fixer’s readers and viewers have turned to the CFPB to file a complaint, report a scam or get consumer advice.
Remember when Wells Fargo employees were caught opening two million fake accounts in consumers’ names just to keep up with sales goals? The CFPB levied record fines in that case – $100 million – which sent a clear message to banks about what happens when you or your employees defraud the little guy.
Besides pushing to roll back Dodd-Frank, Trump on Friday ordered a delay of the “fiduciary rule” that concerns whether financial professionals should have to put their customers’ interests ahead of their own.
That’s another big issue for the little guy.
If you’re investing for retirement, would you want to know whether your banker is making more money for himself by steering you one way or another?
Many of us read Consumer Reports when choosing a car, credit card or major appliance. Consumers Union, which is the policy arm of Consumer Reports, warns that scaling back Dodd-Frank will put consumers – the little guy – at risk.
“The financial crisis was devastating for American families,” said Laura MacCleery, vice president of consumer policy at the organization, in a statement. “People lost their homes, the jobs and their savings. Dodd-Frank was put into place to raise standards for financial firms and ensure consumers are treated more fairly and honestly.”
More fairness and honesty for the little guy.
The Fixer’s advice is to stay watchful and make sure that’s what we’re getting.
-The ABC News Fixer
Do you have a consumer problem? Contact The ABC News Fixer. Letters are edited for length and clarity.
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