On the fourth anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the American Enterprise Institute’s Peter Wallison declares in the Wall Street Journal that it “has already overwhelmed the regulatory system, stifled the financial industry and impaired economic growth.”
As I've pointed out, the law has been a boon for federal regulators, and at the same time, it has generated uncertainty for financial institutions. For instance, the Financial Stability Oversight Council (FSOC) takes actions with little transparency, and it’s anyone’s guess as to how it determines what systemically important financial institutions (SIFIs) are.
Wallison gives one example of how the financial industry is adjusting:
Several months ago J.P. Morgan Chase announced that it plans to hire 3,000 more compliance officers this year, to supplement the 7,000 brought on last year. At the same time the bank will reduce its overall head count by 5,000. Substituting employees who produce no revenue for those who do is the legacy of Dodd-Frank, and it will be with us as long as this destructive law is on the books.
Simply put, Dodd-Frank's immense regulatory burden is weighing down an economy trying pull itself up:
These uncertainties, costs and restrictions have sapped the willingness or ability of the financial industry to take the prudent risks that economic growth requires. With many more regulations still to come, Dodd-Frank is likely to be an economic drag for many years.
Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.