ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

The Dodd-Frank Act explained

After every major financial crisis over the past century, policymakers in the executive and legislative branches of the United States government have passed sweeping legislation to overhaul the way banks do business.

The Panic of 1907 prompted the Federal Reserve Act of 1913, which created our central bank. The Great Depression led to the Glass-Steagall Act of 1933, which established the Federal Deposit Insurance Corporation and prohibited the cohabitation of investment and commercial banks. And the litany of crises throughout the 1970s and 1980s convinced Congress to broadly deregulate the bank industry through a series of wide-ranging legislative acts.

Trump to dismantle Dodd-Frank Wall Street rules through executive orders

It's only through this lens of historical context that one can truly appreciate the Dodd-Frank Act of 2010, which came on the heels of the financial crisis that erupted two years earlier.

Fighting the last war

Generals are often accused of "fighting the last war," in that they set their strategies going forward based on their most recent combat experience. This can be a mistake, of course, because times change. Strategies evolve. Adversaries adjust. Weapons systems advance. The same can be said of the intent behind the Dodd-Frank Act, which was conceived with the best of intentions.

Fissures in global financial markets were first exposed in August 2007 when a leading bank in Europe, France's BNP Paribas, stopped allowing investors to withdraw capital from two funds that held mortgage-backed securities. The situation escalated seven months later when Bear Stearns experienced a liquidity crisis. The investment bank's institutional clients stopped providing the funds the bank needed to stay afloat. Things got so dire that the federal government offered JPMorgan Chase (NYSE: JPM) a $30 billion loan to facilitate its acquisition and thus rescue.

But it wasn't until September 2008 that the crisis climaxed with the failure of Lehman Brothers, the nation's fourth-biggest investment bank at the time. The stock market plummeted. Credit markets froze. And countless companies, both within the financial sector and outside of it, found themselves on the brink of failure. The fear pulsing through the credit markets was particularly alarming because it made it impossible for even the most creditworthy of companies such as General Electric to access the funds needed to cover its payroll and other ordinary operating costs.

Read the entire story at USA TODAY

Payday-loan rule would hurt small businesses, borrowers: Local Viewpoint; Brian Lynn is president of LendingBear

Last summer, the Consumer Financial Protection Bureau proposed a rule that would essentially eliminate the short-term lending industry, take away credit options from millions of consumers, and force my family's small business to close its doors. My father founded LendingBear more than 20 years ago to help hardworking Floridians during trying financial times through payday loans and other short-term lending solutions.

The CFPB was required by law to bring together a number of small-business owners to hear how the payday lending rule would affect small businesses. I was honored to be selected to participate in these discussions, but from the start, it was clear that the CFPB didn't care about my perspective.

The bureau estimated that the proposed rule would decrease small-business revenue by more than 70 percent. When I saw that number spelled out, I realized that the proposed rule is meant to put companies like mine out of business, not to protect consumers.

Without evidence, the bureau decided that payday loans are harmful to consumers. Instead of talking to people who use payday loans to find out why they make that decision, the CFPB let activists with their own agendas write the rule. Read the entire article at ORLANDO SENTINEL

Trump says that rolling back Dodd-Frank will allow 'friends of mine' to borrow money again

On Friday, President Donald Trump announced his intention to sign an executive order rolling back the Dodd-Frank Wall Street Reform and Consumer Protection Act, with a nod to his friends' "nice businesses."

"We expect to be cutting a lot out of Dodd-Frank, because frankly I have so many people, friends of mine, that have nice businesses, they can't borrow money because the banks just won't let them borrow because of rules and regulations and Dodd-Frank," Trump said.

Dodd-Frank was signed by President Barack Obama in 2010 in the wake of the 2008 financial crisis. White House National Economic Council Director Gary Cohn said the rollback would give Americans more choices "because we're not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year. ... The banks are going to be able to price products more efficiently and more effectively to consumers." Jeva Lange THE WEEK

Supreme Court pick could spell trouble for the CFPB

President Donald Trump's first Supreme Court pick has been identified as the "most natural successor" to the late Justice Antonin Scalia, whom he would replace.

Neil Gorsuch, 49, a judge on the 10th Circuit Court of Appeals in Denver, is said to share many of Scalia's beliefs and his judicial philosophy. That could tip the high court back toward the 5-4 conservative split it held during controversial cases prior to Scalia's death, although Justice Anthony Kennedy will remain a liberal swing vote on certain social issues before the court.

Gorsuch's big judicial decisions have favored religious freedom over government regulation and state's rights over the power of the federal government.

But how might that impact consumers or their wallets directly?

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"I think with a judge like Gorsuch, you can see there probably will be a tendency in that direction to dissuade innovation," says David Reiss, a law professor at Brooklyn Law School and the academic program director for the Center for Urban Business Entrepreneurship.

That could mean the Consumer Financial Protection Bureau, whose unique management structure a judge on the U.S. Court of Appeals for the D.C. Circuit last fall called unconstitutional, could face an obstacle on the bench should the legal fight over its construction ever reach the Supreme Court.

Judge Brett Kavanaugh, who wrote the majority opinion for the D.C. circuit panel, said because this independent agency is headed by a director whom the president cannot fire at will - and not, say, a set of commissioners like other agencies within the government - it is a threat to individual liberty. Read more at BANK RATE

Yes, banking regulations need reform, but don't kill Dodd-Frank, Barney Frank says

Some regulations in the Dodd-Frank act should be changed, but don't kill the law, which was enacted to prevent the abuses that lead to the Great Recession, one of the regulation's architects told CNBC on Monday.

The Dodd-Frank Wall Street Reform and Consumer Protection Act are now under threat by a Republican-controlled government.

"Yes, there are a couple of particular things where we could tighten it up, but the assault on the major set of plans is greatly mistaken," former Rep. Barney Frank, D-Mass., said on "Squawk Box Asia."

In an interview later on "Squawk on the Street," Frank said President Donald Trump's attacks on the banking law are "not personal at all."

"I don't feel any more strongly about this than I would about other important things that were done. This is a matter of public policy," he said. Read more at CNBC

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