On Tuesday, July 13, the Asset Building Program at the New America Foundation held a panel discussion on the Dodd-Frank financial reform bill. The panel of experts discussed the content of the bill and explored the relationship between the “Main Street” and “Wall Street” financial industries and a variety of possible policy and real-world implications for both groups, and for consumers. Discussants focused on the inherent potential of this historic financial reform moment. Such an overhaul of the financial sector has not been seen since the era of the Great Depression in the 1930s.
Several panelists echoed remarks by Tim Fernholz, staff writer at The American Prospect and Research Fellow with the Asset Building Program at New America, who stressed that the Dodd-Frank bill will not be a comprehensive overhaul of Wall Street that provides strict limits on bank size and other controversial issues, but rather will provide a framework for regulators to establish and enforce guidelines. Panelist Heather McGhee, the Director of the Washington, DC office of Demos, a nonpartisan public policy and advocacy organization, stated that the Systemic Risk portion of the bill designed to deal with the workings of Wall Street is perhaps weaker than she would like but nonetheless if implemented properly could result in greater oversight of the financial sector.
Ms. McGhee, Mr. Fernholz and Travis Plunkett, Legislative Director at the Consumer Federation of America, all stressed the need for strong leadership throughout the implementation of financial reform. Because the Dodd-Frank bill provides but the framework for reform and leaves federal regulators and whoever is tapped to head the forthcoming Consumer Financial Protection Bureau (CFPB) (Agency) to add “meat to the bones,” essentially fleshing out the bill’s regulatory language, leadership will be key to implementing substantive financial reform measures.
Panelist Leslie Parrish, Senior Researcher at the Center for Responsible Lending, stressed the need for the CFPB to oversee the complex and often predatory consumer financial product sector. These “non-bank” businesses, like payday and auto lenders for example, have not been subject to previous federal regulation despite their deleterious effects on household financial well-being. Devin Fergus, fellow at the Woodrow Wilson International Center for Scholars, stressed that historical precedent indicates the need for whoever is chosen to lead the CFPB to move quickly and work to set effective regulatory guidelines for these and other consumer financial products while the causes of the financial crisis are still fresh in the minds of the American people.
When asked how quickly consumers and those in the advocacy community should expect to see financial reform take effect, Mr. Plunkett predicted that real action from the CFPB will not come for at least another two years as the bureau has yet to be established and the bill is weighted heavily toward further study and delayed implementation of rules and regulations. Mike Konczal, a fellow at the Roosevelt Institute, echoed those comments saying that real change on Main Street and Wall Street alike will only come when the focus on the financial sector shifts back towards supporting the American economy and promoting the innovation necessary to move the country out of the Great Recession.
Legislative Director, Consumer Federation of America
Fellow, The Roosevelt Institute
Writer, Rortybomb, New Deal 2.0
Director, Washington Office, Demos
Senior Researcher, Center for Responsible Lending
Staff Writer, The American Prospect
Research Fellow, Asset Building Program, New America Foundation
Fellow, Woodrow Wilson International Center for Scholars
Assistant Professor, City University of New York, Hunter College
Director, Asset Building Program
New America Foundation