Herman Cain has a way of simplifying a concept so that people can easily understand and remember his ideas. Tonight Cain articulated the GOP opposition to Dodd Frank in a way that makes much more sense to me than any other candidate has done. He said that there were three reasons to repeal Dodd Frank: 1) It does nothing about Fannie Mae and Freddie Mac; 2) Dodd; 3) Frank. The crowd, responding with applause, clearly agreed with his clear though simple analysis.
In fairness, there are thousands and thousands of bills that do nothing about Fannie Mae and Freddie Mac. I don’t know that all of those bills ought to be repealed simply because they do nothing about Fannie Mae and Freddie Mac. Perhaps he should propose a separate bill that cures the Fannie Mae and Freddie Mac problem and leave the rest of it alone.
Regarding his second reason (and for the sake of efficiency, let’s examine his third reason at the same time), Dodd and Frank are perfectly good names, but if he would like to go to something like Todd and Spank, that would be fine with me. I don’t understand his objection, but if it brings offense, I think we should be willing to compromise.
I have listened to many more Republican candidates than I care to think about and truly, this was the best that any of them have done to explain their opposition to Dodd Frank. I think it’s worthwhile to examine what Dodd Frank does. It’s a large bill with many provisions.
1. Promotes Financial Stability with the Financial Stability Oversight Council and the Office of Financial Research. Their goals are to enhance the integrity, efficiency, competitiveness and stability of the financial markets, promote market discipline and maintain investor confidence.
2. Develop rules for the orderly liquidation of banks, non-bank financial companies and insurance companies.
3. Transfers powers to the Comptroller, the FDIC and the Fed. In addition, it increases the amount of FDIC insurance from $100,000 to $250,000.
4. Introduces regulation of hedge funds and calls for studies by the GAO and SEC regarding the potential of self-regulation and a study of short selling.
5. Establishes a Federal Insurance Office. Prior to this act, all insurance was regulated by state law. It is clear that some State Insurance regulators are not up to the task of appropriately regulating sophisticated insurance companies.
6. Introduces the Volker Rule which limits banking speculation. Banking entities may only use 3% of its funds for speculative purposes.
7. Increases Wall Street Transparency by regulating credit default swaps and other derivatives.
8. Calls on the Federal Reserve to create uniform standards for payment, clearly and settlement to properly manage systemic risk.
9. Provides for greater Investor protection to establish fiduciary responsibility of broker/dealers and increases regulatory enforcement and remedies on investment companies.
10. Improves regulation of credit rating agencies.
11. Improves the asset-backed securitization process
12. Enacts rules for disclosure of executive compensation to shareholders.
13. Establishes the Bureau of Consumer Financial Protection which is divided into 5 parts: research, community affairs, complaint tracking and collection, office of fair lending and equal opportunity, office of financial literacy.
14. Federal Reserve System Provisions.
15. Improving access to mainstream financial institutions.
16. Pay it Back Act. The $225 B of unused TARP funds had to pay for deficit reduction.
17. Mortgage reform and anti-predator lending. This establishes standardized underwriting forms and encourages lenders to lend money to people who can repay the money.
18. Many other miscellaneous provisions.
This is a very, very brief and oversimplified explanation of Dodd Frank. Herman Cain believes that it should be repealed because it does nothing about Fannie Mae and Freddie Mac (which is 100% true) and because of Dodd and Frank. Others GOP candidates have called for the repeal of Dodd Frank saying that it is anti-business, but Cain is the only one who said why it should be repealed.
Bottom line: GOP primary is a freak show.