The Democrat’s Platform on Finance: More Regulation

By at 28 July, 2016, 7:49 am

by Raymond J. Keating-Democrat platform

The Democratic Party’s platform offers the following sound declaration on small businesses and access to credit: “We will open up access to credit because we know that small businesses are some of the best job creators in our country.” And at another point, it is said, “We must make Wall Street work for the job-creating, productive economy—including by making loans more affordable for small- and medium-sized businesses.”

That’s most welcome, especially considering the regulatory onslaught of recent years thanks to the misguided and costly Dodd-Frank financial regulation law.

Are such statements real or are they merely political posturing? That’s a fair question especially given what the platform says in support of Dodd-Frank.

Consider the following from the Democratic platform.

“We will also vigorously implement, enforce, and build on President Obama’s landmark Dodd- Frank financial reform law, and we will stop dead in its tracks every Republican effort to weaken it.”

“We oppose any efforts to change the CFPB’s [Consumer Financial Protection Bureau’s] structure from a single director to a partisan, gridlocked Commission and likewise oppose any efforts to remove the Bureau’s independent funding and subject it to the appropriations process.”

“Democrats will not hesitate to use and expand existing authorities as well as empower regulators to downsize or break apart financial institutions when necessary to protect the public and safeguard financial stability, including new authorities to go after risky shadow-banking activities.”

As noted in assorted SBE Council analyses – such as this piece — Dodd-Frank has dramatically expanded the government’s regulatory reach, hurting access to credit and small banks, while ignoring the actual causes of the 2008 credit mess, such as federal “affordable housing” policies creating a disconnect between home ownership and economic reality, quasi-government entities like Fannie Mae and Freddie Mac privatizing profits and passing off losses to the taxpayers, along with loose monetary policy creating further distortions in the marketplace.  In addition, there have been several sound pieces of bipartisan legislation that have been introduced (and passed the U.S. House) to correct the serious flaws and consequences of Dodd-Frank.

The platform’s support for Dodd-Frank – including the CFPB being completely unaccountable to congressional oversight, as well as calls for additional, expanded regulatory intrusions – points more toward political pandering and regulatory intrusion, rather than serious consideration of what’s needed to expand access to capital for entrepreneurs and small businesses.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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