Dodd-Frank Won't Stop 'Too Big To Fail' Banks, Public Poll Says

As policymakers continue to spar over how much the nation's big banks should be reined in, many people have lost faith in the idea that it will ever happen, a new poll suggests.

More than half -- 57 percent, to be exact -- of those recently polled by American Banker said Dodd-Frank financial regulatory act has not given regulators the "power" to let too-big-to-fail banks, well, fail. The poll implies that the publics believe banks are here to stay precisely because new rules put into place since the financial crisis are not tough enough to allow major banks to collapse without risking macroeconomic catastrophe.

This informal poll also somehwt reflects what some top policymakers have said -- mainly that many banks remain so gargantuan and so entrenched that the country has an interest in protecting them, for better or worse.

Take, for example, a March report by the Federal Reserve Bank of Dallas that argued many banks are not only still operating at a too-big-to-fail level but eroding public confidence in capitalism as it's practiced in America.

"[V]irtually nobody has been punished or held accountable for their roles in the financial crisis," the report reads in part. "TBTF undermines equal treatment, reinforcing the perception of a system tilted in favor of the rich and powerful."

At around the same time, Federal Reserve Chairman Ben Bernanke said in an address at George Washington University that "there is something fundamentally wrong with a system in which some companies are... too big to fail."

Wall Street has done its part to make sure Washington waters down financial reform as much as possible, enacting a major pushback against the regulatory package. Indeed, in one 12-month period, lobbyists from Goldman Sachs alone were showing up on Capitol Hill an average of once every four days -- and the actual implementation is running conspicuously behind schedule, with regulators missing more than a hundred deadlines for putting rules on the books thus far.

Comments

[aforbes808]

01:10 PM on 04/13/2012

““"The too-big-to-fail institutions that amplified and prolonged
the recent financial crisis remain a hindrance to full
economic recovery and to the very ideal of American
capitalism. It is imperative that we end TBTF." ~ Annual Report Dallas Federal Reserve.

Choosing the Road to Prosperity
Why We Must End Too Big to Fail—Now

http://dallasfed.org/assets/documents/fed/annual/2011/ar11.pdf

Wake up sleepy heads. It's time to RISE and SHINE. Pax.

[walstir]

11:09 AM on 04/09/2012

The TBTF issue is a red herring. If you take one TBTF bank and divide it into two small-enough-to-fail banks which subsequently both fail for the same reasons that the original TBTF bank would have failed; then the effect on the economy would be the same. Eliminating TBTF banks is only a benefit when it prevents individual rouge banks with unique problems from endangering the financial system. The current crisis was the result of a wider problem (a worldwide credit bubble) rather than the collapse of an individual bank and hence would have occurred even if there were no TBTF banks. A country like Canada which has much larger and many fewer banks relative to the size of their economy and compared to the U.S. has largely escaped the current crisis regardless of its TBTF banks.

[K August]

01:01 AM on 04/08/2012

"Indeed, in one 12-month period, lobbyists from Goldman Sachs alone were showing up on Capitol Hill an average of once every four days -- and the actual implementation is running conspicuously behind schedule, with regulators missing more than a hundred deadlines for putting rules on the books thus far."

It also doesn't help when the GOP keeps threatening to cut funding to every agency that needs to write rules under Dodd-Frank Wall Street Reform Act.

If we are to save the country........ we need to get the Anti-American GOP out of office and replace them with moderates who ARE willing to do the right thing for the Country and for it's citizens!

[authorized-user]

03:55 PM on 04/06/2012

Here is DC's recipe for financial reform;

ADD water til it drowns.

[Tquin]

02:33 PM on 04/06/2012

This bill should be no surprise, it was passed by very very small people.

[Contra1]

02:35 PM on 04/06/2012

small "mendacious" people.