Press Releases

Today, the House Committee on Financial Services, led by Chairman French Hill (AR-02) held a hearing to evaluate the real-world impact and unintended consequences of the Dodd-Frank Act, which was enacted into law 15 years ago in the wake of the financial crisis. Members examined the expansive regulatory bureaucracy created by the law.

On the unintended consequences of Dodd-Frank:

“Dodd-Frank was sold to the American people as a sweeping fix to prevent another crisis, yet over time it has become clear that this approach has not delivered as promised for Main Street. Instead, history shows that it punished community financial institutions through its one-size-fits-all mandates, shifted activity outside the banking system, created new and unaccountable agencies like the CFPB, and prioritized duplicative compliance and regulation by enforcement over actual consumer protection,” said Chairman French Hill.

On how Dodd-Frank has affected their districts:

"Before this hearing I reached out to some Nebraska bankers to get their take on what the biggest takeaways from the Dodd-Frank law have been from their perspective. One significant change has been the consolidation that has taken place post Dodd-Frank. In 2009, there were 225 commercial banks in Nebraska. According to the FDIC in 2024, there are just 142. That's a 36% decrease over the last 15 years," said Rep. Mike Flood (NE-01).

"Chairman Gensler and the SEC repeatedly overstepped its statutory boundaries invoking authorities under Dodd-Frank in ways that neither align with the law's intent nor advance the Commission’s three-fold mission: to protect investors, to maintain fair, orderly and efficient markets, and to facilitate capital formation. In fact, Gensler's regulatory agenda undermined these goals. Under President Biden, everyday Americans in Missouri's Second Congressional District were told they would have fewer choices, increased costs, and less clarity on who they could ask for financial advice,” said Rep. Ann Wagner (MO-02).

"The biggest issue I hear from lenders in my district from the great state of Texas is the CFPB's 1071 Small Business Lending Rule. ... The implementation of 1071 is a direct threat to relationship banking and pushes lenders towards a standardized one-size-fits-all loan process. These mandates subject smaller institutions to endless hours of compliance and paperwork and will decrease the amount of loans to small businesses that support their local economies," said Rep. Roger Williams (TX-25).

“Small businesses are incredibly important to Tennessee’s economy. They make up the majority of all companies in the state and are considered the backbone of the economy. These businesses not only create jobs but also foster innovation and contribute significantly to the local communities. Section 1071 of the Dodd-Frank Act requires lenders to compile, maintain, and report information regarding loan applications made by certain businesses. Unfortunately, I understand that implementation of these requirements, based on a rulemaking under the Biden-era leadership of the CFPB, can be an enormous undertaking. The compliance burdens could result in some lenders choosing to terminate their small business lending programs altogether due to compliance costs,” said Rep. John Rose (TN-06).

"I've heard from the banks and credit unions in my district across Montana, just how harmful Dodd-Frank has been. One bank plainly told me that the creation of the CFPB has been the most negative and costly provision of Dodd-Frank. Another small bank told me they've gone from one compliance officer before Dodd-Frank to four today – drastically increasing costs. I've heard similar stories on Rule 1071 specifically, and in 2008, Montana had 64 state-chartered community banks, today there's 33," said Rep. Troy Downing (MT-02).

"Two decades ago, there were over 8,500 FDIC insured banks in the United States. Today that number is just 4,000. Many of the banks we have lost are small community banks, which play a vital role in my district in northeast Indiana. Though there are several reasons for this decline, I believe Dodd-Frank's one-size-fits-all regulatory approach for banks is a key contributor,” said Rep. Marlin Stutzman (IN-03).

Witnesses echoed their support for the work of the Committee.

The Honorable Ken Bentsen, President and Chief Executive Officer, Securities Industry and Financial Markets Association, said: “The post-2008 financial crisis regulatory and supervisory reforms, as culminated in the Dodd-Frank Act, were the most expansive financial regulatory actions since the 1930’s, then in response to the Great Depression. The Act, comprised of sixteen titles and resulting in approximately 400 rulemakings, significantly expanded the number, breadth and intensity of regulatory and supervisory requirements to which the U.S. financial sector is subject. … Though many of the Dodd-Frank reforms have made the U.S. financial system more resilient and less prone to shocks, they are not without cost, and we believe that appropriately tailored regulation should balance the dual goals of enhancing financial stability and investor protection while supporting the flow of investment capital to end-users who deploy that capital to create jobs and grow the economy.”

Lindsey Johnson, President and Chief Executive Officer, Consumer Bankers Association, said: “When considering the lessons learned and road ahead, it is important to assess not just the many Dodd-Frank Act reforms, but also its unintended consequences. Overregulation of the banking system has led to disintermediation of credit, pushing more lending outside of regulatory perimeter. Federal regulators routinely enacted rules and regulations without considering their individual – or cumulative – impact on consumers’ access to banking services and products. Furthermore, overly complex regulations have failed to address areas of true consumer harm and have often resulted in increased costs. Promoting the safety and soundness of our banking system and consumer protections are critical imperatives. But competition, innovation, and well-functioning markets are just as important – and indeed statutory objectives for the CFPB. Accordingly, before creating new regulations, policymakers should be expected to fulfill their statutory duties to examine the consumer impact of each rule as well as how the cumulative impacts of regulation could threaten to push lending outside of the banking system to less regulated entities, and can add costs that are ultimately borne by consumers.”

Tom Quaadman, Chief of Government Affairs and Public Policy, Investment Company Institute, said: “Fifteen years after the enactment of the Dodd–Frank Act, it is important to assess how well the law’s implementation has achieved its goals — and where it may have unintentionally introduced inefficiencies or misalignment of risk. While the Act sought to give regulators new powers to assess and address potential financial stability risk, in its implementation agencies have, in practice, imposed unnecessary and costly burdens on regulated funds and their advisers without sufficient acknowledgement and appreciation of the commensurate benefits of such funds to investors and the broader financial system. ICI supports smart, effective regulation. But regulation must evolve to keep pace with changing markets. With more than 120 million Americans relying on registered funds to save for retirement, college, homeownership, and other goals, it is essential that our regulatory system reflects the tools and technologies investors use today — and anticipates those they’ll need tomorrow.”

Paul Kupiec, Senior Fellow, American Enterprise Institute, said: “The goals in the Act’s preamble includes financial stability, improved accountability and transparency, and an end to too big to fail to protect the American taxpayer by ending bailouts. But in March of 2023, the federal government was forced to take emergency measures to bail out the banking system. The crisis occurred when depositors withdrew their funds wholesale after recognizing that large, unrealized interest rate losses had effectively rendered their banks insolvent. The crisis was averted when the Treasury instituted a blanket deposit insurance guarantee for failed banks and funded a $25 billion first loss backstop for a Federal Reserve emergency lending program needed to bail out the banking system. The Fed’s Bank Term Funding Program provided banks with emergency liquidity. … By many, many objective measures, the complex provisions and regulations in the Dodd-Frank Act did not work as their authors intended.”