What is the Dodd-Frank Act?
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act for short), was named after its sponsors, Democratic Senator Christopher J. Dodd of Connecticut and U.S. Representative Barney Frank of Massachusetts. It became law in 2010.
In a nutshell, it was enacted in order to help prevent another collapse of a major financial institution, such as what happened to Lehman Brothers in 2008 after the housing disaster. But it was also created to help protect consumers from abusive and deceptive practices committed by banks.
Why Should I Care if it’s Repealed?
There are plenty of reasons why all consumers should be extremely concerned about the prospect of a Dodd-Frank repeal. One of the main caused of the financial crisis of 2008 – the one that almost sent the U.S. into another Great Depression – was that consumers had little recourse when it came to holding lenders responsible for deceptive practices.
For example, millions of Americans signed up for credit cards thinking they would only have to pay an interest rate of 6 percent, thanks to advertising that touted incredibly low “teaser” rates. They soon found out, however, that they would actually be paying rates of anywhere from 18 to 30 percent.
Even worse, millions more obtained mortgages based on deception. They were promised extremely low interest rates, but those rates soon skyrocketed. As a result, the housing bubble burst, an incredible number of Americans lost their homes, and the country plunged into its worst financial crisis since the 1930s.
The protections that helped shield consumers from these deceptive practices could very well be stripped away.
This isn’t a Republican issue, and it’s not a Democratic issue. It’s simply about Protecting What’s Right. Our country cannot afford a repeal of the Dodd-Frank Act.