What is Dodd-Frank?

So as I mentioned before I'm trying to do my own research for some topics. This will give me some "case studies" that I can use to see if the Alethia Project makes any sense.

My topic today is Dodd-Frank.


I've been reading Mike Konczal's Rortybomb blog for a while, since before he moved to the Roosevelt Institute. He's mentioned the mechanisms of how Dodd-Frank attempt to keep another financial crisis from happening in the same way. He mentioned specifically how a bank that was previously too big to fail is now forced to write a living will that will let the government 'wind down' the bank. It also spells out in detail who gets a claim on the assets, and in what order. It says that the management must be fired, and the shareholders are the last to get any money. All of this makes sense to me and I agree with how it's structured. I felt like I was informed.


Enter the first 2012 presidential debate.

Romney surprised me with some of his comments. When I heard him say

"[Dodd-Frank] designates a number of banks as too big to fail, and they're effectively guaranteed by the federal government. This is the biggest kiss that's been given to -- to New York banks I've ever seen."

I yelled at the TV for that one, because I was sure he was wrong, either lying or just incompetent. Thinking about it for a bit, I had to admit that I only knew one take on the legislation.

So I decided to do some research on this and see if I can figure out if I'm right or wrong.


I'm doing this research anyways even though I'm jaded about Romney's quote being truthful. He didn't have a good track record during that debate:

  • Half-truth:

    "And so Dodd-Frank correctly says we need to have qualified mortgages, and if you give a mortgage that's not qualified, there are big penalties, except they didn't ever go on and define what a qualified mortgage was. It's been two years. We don't know what a qualified mortgage is yet."

The commission has a schedule to fully define that in Jan 2013. Despite the Senate Republicans blocking appointment of the CFPB commissioner, it's looking to hit that deadline.

  • Lie:

    "And these businesses, many of them have gone out of business, I think about half of them, of the ones have been invested in have gone out of business."

Out of the 26 firms given guaranteed loans, 3 have gone bankrupt.

  • Lie or ignorant

    "The second topic, which is you said you get a deduction for taking a plant overseas. Look, I've been in business for 25 years. I have no idea what you're talking about. I maybe need to get a new accountant."

Obama was talking about how shutting down a plant in New Jersey (whether to move it to New York or to Shenzhen) is a business expense, and so is tax deductable. I'd believe Romney just didn't know what Obama was talking about (Obama said it in a heavily skewed way) except there was a vote to fx this in the Senate in June (the Bring Jobs Home Act and the Republicans shot it down.

Abandoned blog post

I'm publishing this years later under the date when it was last worked on since it was never moved out of draft. Some notes I had meant to work on are: