Dodd-Frank, a compromised piece of legislation, helped destroy community banking

[cali]

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Another good example is the often-criticized and wholly-overrated Dodd-Frank law that was ostensibly designed to “rein-in” the “excesses” of Wall Street. Instead, it seems to have acted like an accelerator. Less than two years after Dodd-Frank was signed into law on July 21, 2010, Bloomberg Business reported that just five banks — JPMorgan Chase, Bank of America , Citigroup, Wells Fargo, and Goldman Sachs — saw their assets spike to $8.5 trillion. That equaled a staggering “56 percent of the U.S. economy.”

Like a magic trick, they saw their assets rise 13 percent during a post-Crash crisis that, according to the Treasury Department, simultaneously eliminated $19.2 trillion in household wealth.

By 2015, the top five banks — JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and U.S. Bancorp — were down to $7 trillion for a 44.61 percent share of the banking industry, according to a CNBC report. But that dip may have more to do with switching-out of US Bancorp ($398.98 billion in assets) for Goldman Sachs ($880.56 billion in assets) than it does with the constrictive power of Dodd-Frank.

But Dodd-Frank did constrict community banks. A Harvard Business School study found that the law’s costly, labyrinthine compliance system — which the big banks helped to write — essentially completed a two decade-long process of killing off community-level lending. Oddly enough, it also opened-up those local lending markets to the big, well-connected players listed above.

As a result, community banks assets declined 19 percent since 2010, community-level lending “has fallen by half, from 41 percent to 22 percent” and “the share handled by large banks more than doubled from 17 percent to 41 percent,” reported the Fiscal Times.

Most telling, though, is that during Dodd-Frank’s crucial “rulemaking” phase — when the Congressional prose turns into Executive regulations — revolving-door regulators wrote the law’s actual, functional rules in collaboration with the very bankers and financiers Dodd-Frank was meant to contain in the first place. And now Congress has begun to dismantle this already compromised law with, for example, a new law relaxing its “restrictions” on derivatives.

It’s yet another triumph of political “compromise” for Wall Street. These “compromises” don’t come cheaply, though. According to OpenSecrets.org, Goldman Sachs spiked its yearly lobbying budget from $2.8 million in 2009 to $4.6 million in 2010 — when Dodd-Frank was being assembled in Congress. And $3.4 million is their lowest annual total spent since the law was passed. Overall, the financial industry has spent a hefty $3.25 billion on Dodd-Frank-related finagling.

This is how the interests of Wall Street somehow slide right through the system, while other issues get inexorably stuck in Washington’s infamous gridlock. It’s the cash that lubricates the system, much like oil lubricates American foreign policy. And it’s exactly the kind of “willing to compromise” political pliability that Blankfein told Squawk Box he is afraid of losing if recalcitrant politicians like Bernie Sanders take over the system.

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http://www.dailykos.com/stories/2016/2/16/1486419/--Hillary-Clinton-s-Pay-for-Play-Reality-by-JP-Sottile

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1. Sanders voted for Dodd-Frank

[yeoman6987]

2. An error but he thought it would help

It didn't go as planned but his heart was in the right place. He didn't vote for it with malice at all.

[cali]

3. kick