GAO: Small Banks, Credit Unions Hurt by Dodd-Frank

The Heartland Institute discusses Dodd-Frank with John Berlau. 

John Berlau, a senior fellow at the Competitive Enterprise Institute, says consumers are objectively worse off because of Dodd-Frank.

“Small banks and credit unions are much harder hit by Dodd-Frank,” Berlau said. “Since Dodd-Frank passed, the number of banks with assets of less than $1 billion has declined by 20 percent, and many of those that have managed to stay in business have stopped making new mortgages or issuing money transfer remittances because of the stringent new rules.”

Market principles would be a better solution to the problems Dodd-Frank supposedly attempts to solve, Berlau says.

“The law didn’t even touch the crisis’ major culprits: the government-sponsored enterprises of Fannie Mae and Freddie Mac,” Berlau said. “The way to achieve these shared goals of stopping bailouts and stopping firms from being ‘too big to fail’ would be to repeal 95 percent of Dodd-Frank, phase out Fannie Mae and Freddie Mac, and make a firm rule that, except for existing deposit insurance on bank accounts, no firm will ever be bailed out. Once firms see ‘no bailouts’ as a rule, most will take their own measures to curb unnecessary risk, knowing there is no safety net.”

Read the full article at the Heartland Institute.