President-elect Donald Trump and treasury secretary nominee Steven Munchin have both threatened to “dismantle” or “kill” aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. In a December 8 op-ed for Fortune, Michael Barr - a key architect of the act - warns, “Trump’s dismantling of Dodd-Frank would be 2008 all over again.”
“Ending Dodd-Frank would be deeply misguided and likely to recreate the very conditions that led to the 2008 financial crisis,” says Barr. “The financial sector will get a nice sugar high for a few years, and then crash the economy.”
Repealing Dodd Frank would result in three negative consequences, he says: “eliminating oversight on all but the biggest, FDIC-insured banks, ending oversight of shadow banking, and gutting the consumer bureau.” Barr also defends Dodd-Frank against critiques by lobbyists and legislators who support repealing the act.
“We can’t afford to develop amnesia about the causes and consequences of the financial crisis,” Barr finishes, “or we’re bound to repeat our past mistakes.”
Michael S. Barr is a professor of law at the University of Michigan Law School, a professor of public policy at the Gerald R. Ford School of Public Policy, and a senior fellow at the Center for American Progress and at the Brookings Institution.