Courtesy of Pam Martens
President Obama Signs the Dodd-Frank Wall Street Reform and Consumer Protection Act, July 21, 2010
Today marks the 10th Anniversary of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, named after its two sponsors, former Senator Christopher Dodd (D-CT) and former Congressman Barney Frank (D-MA). The massive piece of legislation was signed into law on July 21, 2010 by President Barack Obama at a time when Democrats controlled both houses of Congress – meaning there was no excuse not to put tough Wall Street reform legislation in place.
While the progressive wing of the Democrats was demanding the restoration of the Glass-Steagall Act, which would have completely separated the federally-insured, deposit-taking banks from the Wall Street casino (the trading firms known as investment banks and broker-dealers), the Wall Street wing of the Democrats didn’t want to upset their big political campaign donors on Wall Street.
The result was that the Wall Street wing of the Democrats won and 2300 pages of mostly worthless “reform” measures were signed into law.
As historians look back on this era, Dodd-Frank will be seen as the seminal failure of the Obama administration. Below is a recap of what happened during the financial crisis of 2007 to 2010 and how Dodd-Frank has failed miserably from preventing it from happening again.
Federally-Insured Banks Blow Up from Derivatives: Thanks to the repeal of the Glass-Steagall Act in 1999 during the Clinton administration, by 2008 almost every major investment bank on Wall Street owned or had merged with a federally-insured, deposit-taking bank. JPMorgan owned the sprawling Chase bank; Citigroup owned Citibank; Lehman Brothers owned two federally-insured banks while Merrill Lynch owned three.
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