By Nancy Wilberg Ricks, Senior Policy and Communications Strategist, NCLR
Last week, Senate Banking Committee Chairman Richard Shelby introduced a 218-page bill, the “Financial Regulatory Improvement Act of 2015,” which would substantially roll back gains made in the Dodd-Frank Act. This is deeply concerning and should give all Americans pause.
In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law to right the economy and prevent another financial crisis. It involved some of the most expansive bipartisan legislation since the New Deal in the 1930s.
The nation has already benefited from Dodd-Frank’s improvements to the market. Families are no longer completely exposed to the risk of unnecessarily losing their homes. Credit card terms are better and clearer. Many fringe financial products have been brought to light and restrained. Consumers are more empowered and aware of their rights. This was the intended result and consumers are grateful.
Today the Senate Banking Committee held a markup on rollbacks that would swing the pendulum backward—to the state of deregulation that led to the financial crisis. This is unacceptable.
The financial industry is experiencing growing pains from Dodd-Frank. Some in Congress see this as a bad thing. Consumers and honest lenders think otherwise. The methods banks and nonbanks alike used to make a profit were hazardous to the market and acutely harmful for families, so many of whom saw a generation of wealth vaporize.
In today’s markup, we saw committee members vote along party lines, some in support of vastly loosened standards for banks and nonbanks. Other senators voted for families to maintain a foothold in the financial industry and keep consumer protections.
Let’s Not Repeat This Part of History
While most Americans have grown tired of hearing about the crisis and recovery, we are at risk of repeating history. Latino families are just now beginning to recover. Hispanics lost 66 percent of their household wealth between 2005 and 2009. These trends were exacerbated by geographic location, as a disproportionate share of Latinos live in California, Florida, Nevada, and Arizona, the states that experienced the steepest declines in housing values during the crisis.
In the aftermath, there was a palpable sense that the financial system was fundamentally unsound and action was needed to prevent a future crisis of the same magnitude. That is where Dodd-Frank came in to make repairs.
Responsible regulations and oversight are essential to protecting Latino consumers and ensuring that honest lenders strengthen today’s economy. Hispanics are the nation’s largest minority group, representing 16.4 percent of the U.S. population. Of the 17 million new homes that will be created between 2010 and 2025, seven million will be purchased by Hispanics.
The strong protections that were enacted by the Dodd-Frank Act are critical to ensuring that families can afford their loans and are not targeted by predatory players. Beyond maintaining commonsense regulations, Congress should have viewed this legislative season as a time to finally build the legacy of financial empowerment for families throughout the nation. Instead, they strive to return the markets to risky, unstable times.