Treasury official defends Dodd-Frank reforms, CFPB
Treasury Department Deputy Secretary Neal Wolin defended reforms tied to Dodd-Frank this week as critics continued to push back against the legislation on the grounds that higher capital requirements for financial institutions will stall the recovery. "The system we had favored short-term gains for individual firms over the stability and growth of the economy as a whole," Wolin said. "The system we had was weak and susceptible to crisis. And the system we had left taxpayers to save it in times of trouble." A significant portion of the criticism levied at Dodd-Frank stems from reforms that require banks to heighten capital requirements, forcing them to fund larger safety nets to prepare for economic shocks in the system. Wolin defended the practice Tuesday. "More and higher-quality capital, especially at the biggest and most interconnected financial institutions, is essential to provide better buffers against shock," Wolin said. "Indeed, as the international community has recognized, the lack of such buffers was a core problem in the crisis we’ve just experienced. Implementation of Dodd-Frank and the work of the Basel Committee are critical to ensuring that firms are better insulated from stress." Wolin also defended Elizabeth Warren's Consumer Financial Protection Bureau, saying rather than stifling choice and innovation, the bureau will create "real choice for consumers." The CFPB has been criticized for having too much independence with no congressional oversight and for overstepping on mortgage servicing issues. Wolin, in response, said the agency is trying to make the choice of owning a home easier to make. "Real choice is about having the information to make the right decisions. The CFPB’s job is to deter deceptive and abusive practices, promote clear disclosure, and help consumers get the information they need," he said. Write to Kerri Panchuk.