White House: Stock Market Gains Vindicate Dodd-Frank Law

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In a press briefing today, White House spokesman Josh Earnest pointed to the overall performance of American stock markets as evidence that the Dodd-Frank regulatory reform bill has succeeded in solving the problem of “too big to fail” without harming the economy, as critics had predicted.

‘I’m loathe to talk about independent movements of the stock market because it fluctuates so wildly based on sometimes unknown forces, but the truth is, when you take a look over the last seven years, there may be no metric on which the economy has performed better than the significant growth of the financial indexes.’

[…] ‘It is one piece of evidence that we have succeeded in both making our financial system safer and more stable and less of a threat to middle class families while at the same time allowing Wall Street to perform an important function.’

[…] ‘Those reforms have led to a financial system that is more stable, and ensures that taxpayers are not on the hook for bailing out financial institutions that make risky bets.’

Calling the legislation “one of the key legacy achievements of this presidency,” Earnest contradicted critics on both sides.

Democratic presidential candidate Bernie Sanders maintains that Dodd-Frank was insufficient to protect American economic security. He wants to break up “big banks” that might threaten the financial system if they should collapse.

Some economists question his logic, and ask whether Sanders would actually improve the stability of the economy or just make lots of bank executives richer without addressing the hedge funds that are also “too big to fail.”

On the other side are all the Republican candidates.

Last October, Donald Trump declared Dodd-Frank is “a disaster” that stifles economic growth.

‘”It’s terrible,” he said in an interview with The Hill, saying that he would “absolutely” repeal it.

‘”Under Dodd-Frank, the regulators are running the banks,” Trump said. “The bankers are petrified of the regulators. And the problem is that the banks aren’t loaning money to people who will create jobs.”‘

In a 2011 op-ed for National Review, Ted Cruz made repealing Dodd-Frank a priority of the agenda that he has carried into the presidential race.

‘A law of massive complexity, Dodd-Frank does nothing to prevent future financial bailouts, but instead subjects the financial sector to costly new regulatory burdens — the cost of which invariably will be passed on to consumers. And its impact hits small community banks hardest. Reasonable government regulations are needed to protect the soundness and integrity of the marketplace, but they should not empower bureaucrats to micro-manage private sector institutions to the detriment of consumers.’

Marco Rubio might be the favorite GOP candidate on Wall Street, as he has consistently voted to overturn Dodd-Frank. There’s a page on his website about it, and he’s repeatedly said that the legislation wiped out “over 40 percent of small and mid-size banks that loan money to small businesses” — a claim that Politifact rates false.

Standing between Sanders and the Republican field, Hillary Clinton has defended Frank-Dodd, saying that attempts to weaken it are “risky and wrong” and vowing to increase oversight of risk. Barney Frank, the former Massachusetts congressman whose name is on the law, is her financial policy adviser.

Jay Carney, who preceded Earnest as White House press secretary, told CNN last month that his former boss is bullish on Clinton.

‘I don’t think there is any doubt that he wants Hillary to win the nomination and believes that she would be the best candidate in the fall and the most effective as president in carrying forward what he’s achieved.’

Defending his administration’s achievement, Earnest puts a thumb on the scale for Hillary.

Featured image via Wikipedia under Public Domain.