Happy seventh birthday, Dodd–Frank Act.

Wall Street has come a long way in the years after Democrats forged the most comprehensive overhaul of the industry’s regulatory regime since the Great Depression. Ten of the biggest U.S. banks just booked $30 billion in profits for the second quarter, just a few hundred million short of the record they set in the second quarter of 2007. And with a capital cushion that’s more than doubled since the meltdown, the biggest financial institutions closed June by acing their annual stress tests. That enabled them to announce windfall shareholder payouts — a sign they’ve largely completed their post-crisis rehabilitation. 

But with trading revenue down — and a new team in Washington eager to ease oversight — some corners of the industry appear to be going through something of a seven-year itch under their regulatory burden. The House last month voted on party lines to gut Dodd-Frank; the Treasury Department followed up with its own report recommending a sweeping rollback of banking rules; and the Senate is considering its options. 

So as the law comes in for a fresh look, I reached out to people who helped shape the original debate to ask what they got wrong. On both sides. That is, for industry advocates who resisted the overhaul, what did they declare at the time would spell economic doom that never came to pass? And for those who helped write the law, where in retrospect do they believe it overreached or missed the mark?

Former Rep. Barney Frank (D-Mass.), then-chairman of the House Financial Services Committee and a namesake of the law, pointed to two changes he would make now. He would raise the threshold for banks that come under extra scrutiny from those with $50 billion in assets to $100 billion; and he’d explicitly exempt banks with less than $10 billion from the Volcker Rule, the provision aimed at banning firms from making certain kinds of risky investments for their own gain. 

Frank added he “vigorously opposes” weakening the Consumer Financial Protection Bureau’s oversight of banks at any level. “I’d provide more flexibility to the smaller and medium-sized banks while preserving the great bulk of the bill and those things that make a systemic crash less likely and protect individuals,” Frank told me. “The fundamental framework of the law is working very well. Banking is both safer and more fully supportive of the needs of the economy.”

And there’s at least one Republican who opposed the law when it was being considered willing to say something nice about it today. Former Rep. Spencer Bachus (R-Ala.), Frank’s GOP counterpart on the committee at the time, said the law’s rules for shadow banking operations and other previously unregulated financial activities don’t get the appreciation they deserve. “While some of the regulations extended to this sector may have greater costs than benefits, and could benefit from significant amendment, this is at least a first step toward bringing this sector within the regulatory environment,” Bachus said in an email. 

John Bowman — who served at the time as the director of the Office of Thrift Supervision, which the law folded into the Office of the Comptroller of the Currency — seconded Frank’s call for lifting the asset threshold, a move now drawing support from some Democrats on the Senate Banking Committee. Among other criticisms of the law, he singled out the Volcker Rule as having “imposed a burden without any upside to the 95 percent of the banks doing business in this country,” to address an issue unrelated to the crisis.

Some made arguments confirming their priors. Former Sen. Ted Kaufman (D-Del.), who chaired the congressional oversight panel on the Wall Street bailout, says he thought the Volcker Rule would be “an excellent alternative” once it became clear a Glass-Steagall revival couldn’t pass. “I have been amazed at the ability of big Wall Street banks to delay its implementation until they had an administration and a Congress who would kill it for them,” he wrote in an email.

Ken Bentsen, who heads the Securities Industry and Financial Markets Association, said it’s still too early to declare that any piece of the statute surprised him on the upside. “We’re still working through the process,” he said. 

And other pro-regulation figures declined to name shortcomings in the law, lest they give fuel to its critics. That’s fair enough — and a sign of the times. 


The latest bombshell Russia story, from The Post late last night: Trump's legal team is working to build a case undercutting Robert Mueller's Russia investigation — and Trump has asked his lawyers about his ability to pardon aides and family members, including himself. The president's lawyers are actively assembling a case that Mueller's team is rife with conflicts, which could be an attempt to lay the groundwork for firing him. More, from Carol D. Leonnig, Ashley Parker, Rosalind S. Helderman and Tom Hamburger: "The president is also irritated by the notion that Mueller’s probe could reach into his and his family’s finances, advisers said. Trump has been fuming about the probe in recent weeks as he has been informed about the legal questions that he and his family could face. His primary frustration centers on why allegations that his campaign coordinated with Russia should spread into scrutinizing many years of Trump dealmaking. He has told aides he was especially disturbed after learning Mueller would be able to access several years of his tax returns."

Trump's lawyers are focusing on political contributions made by some on Mueller's team. They're also looking into an allegation that Mueller had a dispute with the Trump National Golf Club in Northern Virginia over his membership fees when he resigned in 2011. A Mueller spokesman said there was no dispute. 

Meanwhile, Mark Corallo, spokesman for Trump's outside legal team, resigned Thursday. It wasn't immediately clear why, though he'd privately expressed frustration over some recent episodes, including the handling of the revelations around Donald Trump Jr.'s June meeting with Russian officials. 

The Post story followed on the heels of a Bloomberg report earlier Thursday that found Mueller's probe has expanded to include "a broad range of transactions involving Trump’s businesses as well as those of his associates." 

More from Greg Farrell and Christian Berthelsen: "FBI investigators and others are looking at Russian purchases of apartments in Trump buildings, Trump’s involvement in a controversial SoHo development in New York with Russian associates, the 2013 Miss Universe pageant in Moscow and Trump’s sale of a Florida mansion to a Russian oligarch in 2008, the person said. The investigation also has absorbed a money-laundering probe begun by federal prosecutors in New York into Trump’s former campaign chairman Paul Manafort."

Just a reminder, from National Journal's Ben Pershing:

— Anthony Scaramucci — founder of the hedge fund SkyBridge Capital and the SALT conference for financiers — is expected be named White House communications director today. The Wall Street Journal: "Known as “The Mooch,” Mr. Scaramucci previously hosted a financial TV show on Fox Business Network and has been a frequent guest advocating for Mr. Trump on cable news shows."

The Trump administration is weighing whether to pull its nomination of former Rep. Scott Garrett (R-N.J.) to head the Export-Import Bank in the face of mounting resistance from major industry players. Politico's Josh Dawsey and Zachary Warmbrodt: "Garrett has become a political headache for the White House and its economic agenda thanks to intensifying lobbying against the nomination by companies that rely on the agency to guarantee loans for foreign buyers of U.S. exports. Treasury Secretary Steven Mnuchin has also been pressing for the president to dump him, according to White House officials."

The Republican-led U.S. Senate Finance Committee unanimously on Thursday approved President Donald Trump's pick for the Treasury Department's top tax policy job, sending the nomination on to consideration by the full Senate.
The oil giant is accused of entering into a business deal with a Russian CEO with close ties to Putin, right after the United States imposed sanctions
Damian Paletta and Carol Morello
The for-profit club, where Trump spent numerous weekends this spring, asked permission to hire 15 housekeepers, 20 cooks and 35 waiters.
David A. Fahrenthold

Tech and engineering pioneer Elon Musk knows how to capture the public imagination. Thursday he did it by tweeting this: 

For now, Musk isn't offering any further documentation of that verbal agreement. The Post's Michael Laris and Brian Fung report: Questioners on Twitter asked one of the obvious ones: Who gave the permission? Musk did not offer details. But the Trump administration did not knock the notion down. Asked if it had given Musk verbal approval, a White House spokesman said, 'We have had promising conversations to date, are committed to transformative infrastructure projects, and believe our greatest solutions have often come from the ingenuity and drive of the private sector.'"

— Tech stocks have finally surpassed the high mark they set 17 years ago during the dot-com bubble — a development that's stirring new fears that share prices could be overinflated. "But take a step back, and a lot of the gains look more like catch-up than bubble," the Wall Street Journal's James Mackintosh writes. "There might be an everything bubble, but neither tech stocks nor mega-capitalization companies stand out as particularly frothy when looking at performance."

Flummoxed by a rally that this week produced its 27th S&P 500 record of the year, investors are backing off bets that major indexes are headed downward.
The International Monetary Fund provides public access to board-meeting minutes only up to 2010, even though its guidelines require that such information should be available for more-recent deliberations.
Multiple individuals close to Uber's board of directors have reached out to Bank of America vice chairman Anne Finucane about the company's CEO position.

House Speaker Paul D. Ryan (R-Wis.) says negotiators from the House, Senate and the administration are approaching consensus on a framework for rewiring the tax code. Just as notable Thursday when Ryan toured a New Balance shoe factory in Massachusetts was what he didn't say: He didn't mention the controversial border adjustment tax proposal that had formed the spine of the blueprint for an overhaul he's been pushing since last summer.

David Morgan of Reuters reports: "Ryan's remarks, coming about a week ahead of an end-of-July deadline for top White House officials and Republican leaders in Congress to agree on a tax reform framework, could indicate that President Donald Trump's promised tax code overhaul is taking on a more orthodox shape after months of closed-door talks. Republicans in the House of Representatives had billed the BAT as a more effective way to pay for tax cuts than closing loopholes, because it would raise more than $1 trillion over a decade by effectively taxing imports while exempting exports from taxation."

The biggest business lobby is losing patience with the inaction in Congress. In a letter to lawmakers, U.S. Chamber of Commerce president Tom Donohue writes that it’s past time for them to put points on the board. “We are a quarter of the way through this Congress, but we are not yet where we need to be on key issues like health care, tax reform, and rebuilding our crumbling infrastructure. Promises were made; promises must be kept,” Donohue writes. “Members of Congress be warned: Failure is not an option.”

Congressional Republicans moved Thursday to start the process of overturning a new rule that would make it easier for customers to sue their banks. Bloomberg's Elizabeth Dexheimer reports: "Lawmakers led by Senate Banking Committee Chairman Mike Crapo and House Financial Services Chairman Jeb Hensarling introduced legislation Thursday that would enable them to overturn the CFPB’s forced-arbitration rule with simple majority votes in both chambers. The CFPB rule, released July 10, would restrict a practice that has been used by the industry for years to keep grievances tied to credit cards, payday loans and other products out of courts. It was published in the Federal Register on July 19, and is slated to take effect in March."

The House is set to vote on the measure next week, but it faces an uncertain future in the Senate. Republicans there simply need to muster a majority. But three defections would sink it, and industry sources acknowledge that a vote opponents could paint as anti-consumer may be tough to swallow. 

— House Republicans have secured key backing for their five-year reauthorization of the national flood insurance program after making changes that won the support of the National Association of Realtors. The Hill’s Sylvan Lane reports: “NAR said Thursday that the group representing more than 1.2 million real estate agents and industry employees, backed the bill after lawmakers reduced proposed increases to flood insurance rates and preserved a policy that ‘protects homeowners from significant rate increases when a flood map changes.’” The current program expires Oct. 1. 

The Republican and Democratic House campaign committees are running neck and neck: Both have reported raising about $60 million this year.
Mike DeBonis

The White House announced Thursday it is canceling more than 800 regulations proposed but never finalized by the Obama administration. David Shepardson and Valerie Volcovici of Reuters report: "In a report, the Trump administration said it had withdrawn 469 planned actions that had been part of the Obama administration's regulatory agenda published last fall. Officials also reconsidered 391 active regulatory proceedings by reclassifying them as long-term or inactive "allowing for further careful review," the White House said. The steps to eliminate regulations makes good on a much-repeated Trump campaign promise to promote business-friendly policies. Investors have anticipated the action, helping to push share prices higher on hopes that fewer regulations will boost business growth and lead to higher corporate profits."

To run, he would have to leave the Consumer Financial Protection Bureau before completing his term.

This graphic from law firm Davis Polk shows how far the Dodd-Frank rulemaking has progressed, seven years after it was signed into law: 


Coming Up

  • The American Enterprise Institute is holding an event on carbon taxes with remarks from Sen. Sheldon Whitehouse (D-R.I.) and Sen. Brian Schatz (D-Hawaii) on July 26. 

From The Post's Tom Toles: And now the GOP will apply their health-care skills to our democratic lifeblood:


Three things lawmakers want to know from Jared Kushner, Paul Manafort and Donald Trump Jr.:

Trump's attack on Jeff Sessions raises more questions about the Russia investigation:

Sessions says he will remain in his role as attorney general:

Deputy White House press secretary Sarah Huckabee Sanders defends President Trump's "social" conversation with Vladimir Putin: 

Sen. John McCain's (R-Ariz.) most courageous poiltical moments: