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Yellen: Repealing Dodd-frank Would Increase Odds Of Another Financial Crisis

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TRESinc

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http://finance.yahoo.com/news/yelle...ds-of-another-financial-crisis-162821221.html

Speaking at a joint economic committee hearing on the U.S. economic outlook, Federal Reserve Chair Janet Yellen suggested that repealing Dodd-Frank would increase the odds of another financial crisis.

“We lived through a devastating financial crisis, and a high priority, I think, for all Americans should be that we want to see put in place safeguards through supervision and regulation that result in a safer and sounder financial system,” she said in response to a question from New York Rep. Carolyn Maloney. “I think that we have been doing that and our financial system as a consequence is safer and sounder—and many of the appropriate reforms are embodied in Dodd-Frank.”

Enacted after the financial crisis of 2008, the Dodd-Frank act reduced the levels of risks financial institutions could take by requiring them to hold more cash to cover their bets and prohibiting speculation with client money for its own benefit. The legislation also established the popular Consumer Financial Protection Bureau as an agency to field consumer complaints and respond against predatory financial practices. President-elect Donald Trump has repeatedly stated he would dispatch the legislation. That may not be likely, but the CFPB appears to be in trouble.

Yellen cited banks’ higher capital requirements in the post-crisis landscape, as well as a closer monitoring of derivatives, subjecting them to margin requirements to keep them from becoming potentially explosive. The Federal Reserve Chair dismissed ideas about her leaving before her term expires in 2018. She also discussed the progress to end “Too Big to Fail” through the living wills process, which she said was changing the mindset of financial firms and pointing them towards financial stability.

“I think Dodd Frank was very important in fostering those changes and we should feel glad our financial system is now operating on a safer and sounder footing,” she concluded.

As Maloney’s time expired with the Yellen, she quickly snuck in a final question, referencing President-elect Donald Trump’s promises to repeal the Dodd-Frank act. “Do you have concerns that the repeal would make another financial crisis more likely?”

Without a pause, Yellen replied: “I certainly would not want to see all the improvements we have put in place—I wouldn’t want to see the clock turned back on those because I do think they’re important in diminishing the odds of another financial crisis.”
 

J Grant

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What negative impact did Dodd Frank have? The RE market is booming, stocks are up, markets have been stable for a long time, fraud is down /eliminated in large part, what is not working out about it?
 

Terrel L. Shields

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What negative impact did Dodd Frank have?
Where have you been the last six years? Community banks are hard hit. Here we have only one small or regional bank survive intact. All the others have sold, merged, or closed. And can you say portal? Stip? All outgrowth of stricter underwriting.

RE Booming??? Prices same as 10 years ago isn't exactly my idea of a boom.
 

J Grant

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RE recovered and doing well is more descriptive rather than booming is a bit scary since it's nearly always followed by a bust.

They should make some programs/exemptions to help smaller banks. Beyond that, the DF is working...not for us as our job is a PITA re the stips, but it is working in keeping stock market and lending away from predatory/fraud/bad loans minimized . Whatever, it will be repealed and will see if that (hopefully )works any better than the last deregulation that led to people so abusing the system it led to Wall St and RE market near economic collapse
 

ucbruin

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Where have you been the last six years? Community banks are hard hit. Here we have only one small or regional bank survive intact. All the others have sold, merged, or closed. And can you say portal? Stip? All outgrowth of stricter underwriting.

RE Booming??? Prices same as 10 years ago isn't exactly my idea of a boom.

Banks and RE prices....

I'm asking if this is due entirely to DF?

I don't keep track of these things, so I am asking....
 

ucbruin

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Massachusetts
One community bank is closing every day. The prices for consumers is a lot higher. More regulations = higher prices.

Really?

Entirely due to DF?
 
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