Federal Reserve Chair Janet Yellen defended the Dodd-Frank financial reform law in testimony on Capitol Hill on Wednesday.
While GOP members of the House hammered what they called Dodd-Frank’s excessive restrictions on banks in the years since the financial crisis, Yellen spoke favorably of the process the law put in place that allows the Fed to disassemble failed financial institutions.
She said she “would not want to see it removed,” as could be likely if the law was repealed.
Yellen also defended the pace of bank lending to small businesses, saying an “extremely low number” of small-business owners reported having insufficient access to credit since Dodd-Frank was passed in 2010.
Her sworn testimony followed anecdotal comments from President Donald Trump on Feb. 3 that suggested otherwise: “Frankly I have so many people, friends of mine that have nice businesses that can’t borrow money. They just can’t get any money because the banks just won’t let ‘em borrow because of the rules and regulations of Dodd-Frank.”
Dodd-Frank is approaching a reckoning nonetheless. President Trump on Tuesday repealed one of its regulations that had required U.S. energy and mining companies to report fees and taxes paid to foreign governments. And just-confirmed Treasury Secretary Steve Mnuchin is working under a Trump-imposed deadline of early May to determine which elements of Dodd-Frank to change or even eliminate.
In light of the debate, it’s easy to forget the law has had significant impact on Americans’ lives, strengthening certain consumer protections and removing some risk from banks. But it has also failed to address some of the financial contortions that led to the 2008 crash. Watch the video above to learn how the law has succeeded and where it has fallen short of its stated goals.