While the massive economic turmoil that sparked the housing crisis and “necessitated” multiple actions to “bail out” lending institutions and other business entities deemed “too big to fail” incited Americans to demand financial reform, a new report on public sentiment regarding the Dodd-Frank Reform Act indicates that the controversial overhaul may not really have done all that much good. In fact, “trust in the financial system” is sorely lacking in the wake of the bill, with only 12 percent of respondents declaring themselves “satisfied” with the act and a full 54 percent noting that they are “dissatisfied.” Furthermore, trust in the financial system is once again dropping, with September measuring a satisfaction rate of 25 percent.
Thanks to last week’s elections, new Republican congressmen and women are now planning to start trying to scale back many of the regulations in the reform bill in the New Year, and blame regulations on banks and new Consumer Financial Protection Bureau (CFPB) for public dissatisfaction. Interestingly, it is not so much that the public dislikes the actual contents of the reform itself, but that most people think that it is basically a useless piece of legislation that is the actual problem. In fact, only 34 percent of respondents believe that the CFPB is going to protect consumers, and a quarter described it as an “overreaching of government power.” Furthermore, two-thirds of respondents do not think that the legislation will actually help protect against further bailouts.
While all of this directly pertains to the housing market since it is inextricably linked to the lending and banking industry, one particular point of interest will likely be that the study states that “resolving the acute feelings of resentment homeowners have against banks is crucial.” If this issue is not resolved, then strategic defaults are likely to continue to rise, particularly in cases where the loan is held by banks accused – fairly or not – of engaging in predatory lending.
Do you think that the Dodd-Frank legislation is good for the industry?
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