When Laws Don't Work in the Financial World
Sometimes laws that are expected to solve major problems just don't work. That fate is assured when they are weakened during the negotiating process before passage, so what's left after being signed into law is watered down, and regulations that are supposed to implement them are too weak.
The Dodd-Frank law is an example. Passed by Congress and signed into law 2 years ago, it was supposed to deal a crushing blow to Wall Street's extravagance and corruption that was behind our 2008 economic crash. Hidden finance fees in credit contracts, predatory lending, and banks' habit of gambling with taxpayer money were supposed to be history under Dodd-Frank.
Supposedly, bailouts of insurance companies like AIG and mortgage companies such as Fannie Mae and Freddie Mac wouldn't fall on our shoulders anymore. Yet, none of the things we were promised have come about. Why? Because on the way to passage, too many financial giants, through their droves of lobbyists, got their fingers into the pie.
Corporate greed resulted in Dodd-Frank as passed being a ghost of what it was supposed to be. After passage, Wall Street figured the best way to stop what was left from having any effect was to sue the Securities and Exchange Commission over a rule it created to implement the new law. In other words, delay Dodd-Frank for the banks' economic benefit. It worked, so more suits followed, causing more delays.
Another tactic used by big financial institutions, one that also works well for them, is to bully the regulators. If they don't get regulations they like, they send their lobbyists to members of Congress they know they can influence and try to cut off agency funding. They did it to the SEC last year. Later, I'll tell you more about these tactics.
Additionally, I mentioned problems with Fannie Mae and Freddie Mac. If you bought a home from one of them, you may be able to get a lot of money back. Call our legal representatives at The Pittman Firm, and we’ll be happy to explain.