Is Dodd-Frank missing some vital regulatory firewalls?

[think]

Is Dodd-Frank missing some vital regulatory firewalls?

By - April 12, 2016 at 6:35 PM EDT

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JOHN YANG: Eight years after the housing bubble exploded, investment bank Goldman Sachs this week became the last big institution to settle with the government for its role in selling bundles of bad loans to investors, which led to the financial crisis.

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Lynn Stout is a Cornell University law professor who now serves on the Treasury Department’s Financial Research Advisory Committee. She has been very critical of Dodd-Frank, and she joins us now from Ithaca, New York.

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Let’s start off with that Goldman Sachs settlement this week. They have agreed to pay as much as $5 billion in this settlement with the government. What does this say about accountability now among the big financial institutions after the financial crisis?

LYNN STOUT, Cornell University: I’m afraid the settlement confirms something that we have suspected for quite a long time, which is that it looks like fraudulent practices were hard-baked into the banking sector during 2008.

And, unfortunately, although $5 billion sounds like a lot of money, the settlement is actually relatively small. It’s certainly small compared to the damage that was done by these fraudulent practices, and it’s relatively small compared to some of the settlements by some of the other banks, by Citibank and by Bank of America.

So, as large as the figure may seem, I’m afraid it creates the risk that this could be business as usual, that, at the end of the day, Goldman Sachs may have found these sorts of fraudulent practices to overall profitable, even in light of the fines.

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LYNN STOUT: The basic problem with Dodd-Frank is that it created the appearance of Congress doing something, without that appearance being backed up by reality....


Read more:
http://www.pbs.org/newshour/bb/is-dodd-frank-missing-some-vital-regulatory-firewalls/

[Kip Humphrey]

1. Let's see...

Dodd-Frank:
Chris Dodd, lobbyist - Hollywood studios renewed to 2018 former Sen. Chris Dodd’s contract to serve as chairman and CEO of their chief trade organization
Barney Frank, bank board member, Signature Bank.


Yep, there a built-in loopholes.