Dodd-Frank repeal

I remember back then, when Dodd-Frank regulation got implemented, the fear was that seller-financing (of Real Estate) would become impossible, and no more hard money loans for consumers. It certainly changed business.

Today, when everyone was talking about Comey’s testimoney, Dodd-Frank’s partial repeal passed the house:

To be honest, I could not find out what specifically shall be repealed.

Classic move. Distract everyone with something, then take action while no one is looking.

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This is where I am not confident of proper government functioning. They will be fighting or fire-fighting on issue after issues, it will be stale government, but progress may not be there.

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I hope they repeal Dodd Frank…The whole regulatory environment extended the recession malaise that caused the election of Trump…Talk about unintended consequences…lol…Government uber regulations and over reach have made middle America crazed and angry…And did nothing for the average Joe


Freedom trumps regulation.

I would think of the regular check to find out if the banks are solvent or ready to sustain any heavy losses.
They tried to recreate what the insurance companies have anywhere. The state reviews their portfolios, they see if they have $1.15 for every $1.00 they promise to deliver. If not, they are put for sale or another company-ies take over. They don’t have reinsurers.

That wasn’t the point with banks, they were doing what they pleased. Perhaps issuing loans to not so worthy customers. I believe that was what brought down the economy, the liberty of issuing loans right and left without any oversight.

We in the financial industry now have to show our fiduciary duty to our clients. Very strict rules to follow. And that passing meant that almost nothing was changed, a few things that always the lobbyists paid for by the banks can get without any resistance.

Be ready, who knows the future, but freedom some times has consequences. 2008 is the best example.

It’s amazing what people perceive of the bailout vs reality.

The top 2 were govnement sponsored enterprises. They determined the mortgage standards. They were the biggest buyers of sub prime mortgages and biggest issuers of MBS. When people started defaulting on their mortgages, they could pay the bond holders and needed bailed out. If everyone had kept paying their mortgage, there never would have been a crisis.

3 is an insurance company. They were selling credit default swaps or insurance that the mortgage bonds wouldn’t default on payments.

4 is a car company.

Then there’s the reality that the government made a profit off of TARP. It gets called a bailout, but when does a bailout lead to a profit?

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Dodd-Frank exactly nailed the places which will create similar downturn and tried to block recurrences in future. It is too big to discuss/analyze here. People started forgetting 2007-2009 down turn. Based on the details you have provided, which are 100% truth, repealing Dodd-Frank will lead to future disaster which is what Rep+Trump is doing.

On any case, this is suppose to fail at Senate voting.

Let’s be real. The real failure was rating agencies who rated the MBS as AAA. If they would have rated them correctly, then the rates on subprime mortgages would have been much higher. The bubble would have either been much smaller or never formed. Now what did they do to fix ratings agencies?

Also, there were already -12 agencies regulating banks. They all failed. So the solution is to add another agency to regulate the banks? If you want to see how effective CFPB is, look at the Wells Fargo example. They didn’t even discover it. It was discovered by a news reporter. He gift wrapped the info for them, and it was 2 years before anything happened. Now you’re going to trust that agency to prevent another banking crisis?

It was nothing more than a smoke screen to make the public feel safer that the government did something to protect us. It also completely distracted everyone from the government’s role in creating the problem.

Your basic assumption is not right.

You get three agencies FICO scores, not all same. If we have 100 agencies, you will get 100 ratings.

For real estate, if you employ appraisers no two appraisal gives the same value.

I can quote many examples like this.

There’s lots of info available on it.

There are plenty of blogs are available to point credit agencies, plenty to show banks, plenty to show government, plenty to show appraisers…etc.

That is USA, you will get multiple blogs/news media for every side !

Dodd-Frank team analyzed all these info, then recommended right suggestion to government. Unfortunately, it is concept wise conflicting with Republicans and Trump, they are trying to repeal.

Only real estate speculative people like to have DTI pushed towards 100%, but practically if someone wants to live within their family income, it is hard go over more than 30% of DTI, esp for CA residents.

It is easy to account 10% for some retirement account, 8% for CA tax and 22% for IRS, then 30% for living expenses, balance left with is 30% from the income.

That is why simple thumb rule is 1/3rd tax, 1/3rd living and 1/3rd mortgage (PITI).

This is classic example of how credit rating is meaningless

Dodd-Frank increases the likelihood of another meltdown by concentrating and monopolizing the banking industry. Smaller community banks can’t comply with the regulations and so are consolidating and being swallowed up by the big boys.

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AFAIK, extending DTI is harmful either for small or big banks. In fact, bigger banks are vulnerable by extending DTI than small bank.

May I know exactly what provision of Dodd-Frank Smaller Community banks can’t comply with?

Do a google search under “small banks compliance with Dodd-Frank” and you’ll have enough reading material to keep you busy until Christmas - even from outfits like the NYT. It isn’t any one provision. It’s hundreds of them.

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Exactly. We were told the issue was banks were too big to fail. Now the banks are even bigger than before. We have yet another government agency that we are promised will prevent another crisis. Why should we believe it’ll be any more effective than all the agencies that failed last time?

We could have set debt-income requirements with a far smaller bill than what Dodd-Frank was. The bill was 2,300 pages.

Google “how Dodd Frank harmed community banks”

You get tons of articles from a wide range of sources.

If excess DTI loans are provided by either small bank or big bank, that is going to lead to Real Estate foreclosure cycle. This is why Dodd Frank suggested to restrict the lending standards.

Now, you are showing Small banks are suffering from Dodd-Frank as a reason to release the restriction. This is exactly like envying rich guys (big banks) by poor guys (smaller banks).

Compliance is common to either small bank or big bank regarding DTI ratio.

By releasing the restriction, naturally bigger banks will take more shares than smaller banks as the same rule applies to them.

IMO, Republicans release the restriction and leave the bankruptcy or foreclosure issues to be faced by borrower and lender. They do not think it is government’s framework to act. This is pure shortsightedness.

Any way, when the down turn repeated, definitely Trump will not rule this country, but someone will shoulder the burden of bringing back the country.

DTI is one tiny part of the 2,300 pages. DTI is not what’s hurting little banks. DTI only impacts mortgages and everyone (big and small bank) sells their mortgages to Fannie and Freddie. Everyone is literally selling the same product, and the only difference in price is how low they are willing to go on their commission for selling it.

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Freddie and Fannie - quasi-government agencies - were the market makers for subprime loans. They didn’t originate many but they bought tons, freeing up capital to issue more. The other half of it was the Fed holding interest rates far too low for far too long.
I’d argue we are STILL trying to “bring the country back” from that mess. More regulation prevented any real recovery outside of a few pockets of extreme prosperity like the Valley. It’s one reason Mr. “Make American Great Again” got elected. Not every area can build an economy based on trading your personal information instead of actually creating and selling goods and services. It’s a perverse basis for prosperity when you think about it; one born of hyper-regulation. As with banking, it results in wealth concentration and monopolies. No wonder we’ve ended up with such outrageous income and wealth disparities.
Oh and BTW - the S&L crisis of the 80’s was also caused by government. Regulators, in their infinite wisdom, disallowed any sort of diversification for S&L’s insisting they limit most of their investments to local mortgages. Those were deemed “safe.” Until the oil price collapse - then they weren’t.

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