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How is Dodd-Frank pro-bank?

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Wheylous Posted: Fri, Jul 20 2012 3:14 PM

I decided to check out why Dodd-Frank is pro-bank. A while back I saw an article that bankers only wanted part of the act repealed, suggesting they like other parts.

However, I'm interested in specific parts of the bill which help big banks.

I did recently read that small banks will be impacted quite a bit by Dodd Frank (large fixed costs), but I am also seeing big banks leading the charge to repeal the whole thing.

Thoughts?

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Esuric replied on Sat, Jul 21 2012 8:42 PM

The key element  usually highlighted when talking about the Dodd-Frank bill is the provision which requires banks deemed "too big to fail" to bail-out other banks deemed "too big to fail" before the government can spend tax dollars on their own bail-outs. There's a lot more to the bill, of course, but I'm not familiar with most of the actual details. 

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Jargon replied on Sat, Jul 21 2012 9:20 PM

What comes to mind is that it bans OTC gold trading, introduces a whole lot of new paperwork, and provides more regulatory positions for the Federal Reserve.

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What comes to mind is that it bans OTC gold trading

Didn't it "only" ban trading of futures and similar derivatives, still allowing purchase, where the physical gold is delivered within 28 days? Not sure how this affects buying allocated gold.

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A large part of it is what is hinted at above, namely that it creates a more complex maze of compliance that smaller firms can't absorb...essentially like virtually all regulation.  I mentioned other examples of this in the monopoly post.

 

Here's a nice recent post from EPJ:

The Dodd-Frank Monster Continues to Grow

This infographic from the law firm David Polk shows how big Dodd-Frank is getting — and how much bigger it’s likely to get. With this type of growth in regulation, it is going to suffocate many, many businesses. It will be particularly difficult for startups and small firms, who don't have the funds to to hire the personnel to  meet all the new regulations. Thus, in general, these new regulations will build an advantage for large firms. It creates a moat for them and snuffs out new competitors.
 

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