By: Elizabeth Hempowicz

With the too-close-to-call election looming, undecided voters young and old are considering the hot topic issues and how the candidates plan to tackle those issues if elected. For the last few months it has been a battleground of social issues and the economy. The state of our economy has brought up a usual point of contention between Democrats and Republicans: the appropriate level of governmental regulation. At the heart of this issue is the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, which President Obama has stated that he plans to implement in his second term, and Governor Romney is determined to repeal if elected.

The Dodd-Frank Act was enacted in response to the financial collapse of 2008, and generates more government supervision of financial institutions primarily by creating a new agency to implement and enforce consumer financial laws, regulatory capital requirements, and counter derivative regulations. Additionally, the Act was also intended to reform the Federal Reserve and serve as a launching point for mortgage reform. The impetus behind the Act was to create a solid economic foundation to “grow jobs, protect consumers, rein in Wall Street and big bonuses, end bailouts” and the ‘too big to fail’ approach, aimed to prevent another financial crisis. ( However the argument we are now seeing is whether or not the Act has effected any change on the economic climate, and whether or not there is a better way to accomplish the objectives laid out in the Act.

Governor Romney has stated that Dodd-Frank essentially institutionalized the “too big to fail” approach that it meant to abolish, by designating eight U.S. banks as “systemically important financial institutions,” and instituting stronger government regulations on banks in that category. The Act addresses the ‘too big to fail’ approach by the Act by requiring that institutions of that magnitude submit plans for rapid and orderly shutdown to the Orderly Liquidation Authority, should the company go under. However, the FDIC has yet to develop the means to carry out such an “orderly shutdown.” Unless this piece of the Act is implemented, it is likely that Governor Romney’s apprehension will be justified.

Those in opposition to the Act argue that as it stands now it is a legislative inconvenience for small and large banks alike, with complaints that the regulations now imposed are contradictory, complicated, and don’t compromise enough to be effective in the long run. However, the Act has not been a failure and has indeed contributed to growth, albeit marginal, in the banking sector, affecting both small and large banks. Increased loan growth and high returns on equity have been attributed to the Act, garnering support from the small banking sector as represented by Cam Fine of the Independent Community Bankers of America. Fine has praised the Act as “good regulation” as far as the restrictions on big banks. (

Despite growing opposition, President Obama has defended his position on the Act and remains optimistic that given time to work it will have the desired results. The President’s position has been unaffected by disapproval concerning the amount of regulations proposed in the Act.  In fact, the President has expressed a desire for even further regulation and legislation of the banking industry. In an interview with Rolling Stone magazine, he said that in order to protect the banking sector from another collapse he would like to see further legislation that changes the incentives of risky investment on Wall Street and spreads out compensation in a fairer way. Even though the Act attempts to do just that by its inclusion of the Volcker Rule, the President believes it is not enough: “[T]hat’s not something that can entirely be legislated – that’s something that also has to involve shareholders and boards of directors being better stewards of their institutions.” (

In looking towards this election, where the candidates are separated by just 0.2% of the popular vote and a 20 point difference in the Electoral College, it might be time for voters to consider the entirety of the candidates’ platforms rather than zeroing in on their obvious social policy differences. Do we want to try a different approach to our economic legislation, like Governor Romney’s attempt to bolster small banks to encourage competition? Or do we want to put four more years into the Dodd-Frank Act, allowing President Obama what he needs most to turn the economy around—time?


“Where Obama and Romney Stand on the Big Issues”

“Brief Summary of the Dodd-Frank Wall Street Reform and Consumer Protection Act”

Click to access 070110_Dodd_Frank_Wall_Street_Reform_comprehensive_summary_Final.pdf

“Too Big To Fail or Much Ado About Nothing? What Dodd-Frank Means to Small Businesses”

“Is Dodd-Frank Too Complex to Work?”

“Keep It Simple”

“Fact Check: Obama Isn’t Killing Small Banks”

“Presidential Race Too Close to Call”