Debating Dodd-Frank and the recession's human cost

What does the Dodd-Frank Act mean for America’s most vulnerable? 

Take a look at the fight taking place in Congress.

In December, Citigroup lobbyists managed to secure a provision in the “Omnibus” spending bill that weakened the ability of Dodd-Frank to restrict big banks from speculating in the same kind of financial derivatives that led the 2007-08 crash. Progressives fumed.

The provision even allowed for banks to back their bets with tax payer dollars.

But by “getting what they wanted," wrote Rob Blackwell in the American Banker, big banks “thrust themselves back into the limelight in the worst possible way, simultaneously reminding the public of their role in causing the financial crisis and in their continuing influence over the various levers of the U.S government. 

"In one fell swoop, they undid whatever recovery to their battered reputation they'd made in the past four years and once again cast themselves as the prototypical supervillain in a comic book movie.”

Cut to the present. The big banks are getting a reprieve. This week, a study was released from Harvard University arguing that Dodd-Frank unfairly punishes America’s little banks -- community banks.

The banking industry “leapt on the report to condemn Dodd-Frank,” wrote Owen Davis in the International Business Times

Meanwhile, Dodd-Frank’s defenders dug in their heals. At a Senate Banking Committee hearing on community banking regulations yesterday, one of Dodd-Frank's most notable supporters, Elizabeth Warren, challenged the notion that community banks had been hurt.

"If as you claim community banks were particularly hard hit by Dodd-Frank's new rules,” she asked Daniel Blanton, chairman-elect of the American Bankers Association, during the hearing, “why are they making more money since the rules went into effect and doing better than big banks?" 

In all the back and forth, it’s easy to forget what the fight over Dodd-Frank is even about. 

But don't lose sight of the big picture, says Deborah Weinstein, Executive Director of the Coalition on Human Needs.  

“The financial crisis precipitated the Great Recession,” she says, “and the Great Recession caused a loss of federal revenues.”

Which led to cuts. 

Lots of them.

The Coalition on Human Needs has put together a chart showing the human costs of the financial meltdown. The chart documents cuts to federally administered “human needs” programs — 150 total — between fiscal years 2010 and 2015. 

One-third of human needs programs were cut by 15 percent or more, the chart shows, while 39 programs were cut by one-third. Other programs were eliminated altogether.

Under Job Training and Employment, for example, Native American Programs were cut by 21 percent, Youth Training was cut by 18 percent, and Migrant, and Seasonal Farmworkers programs were cut 12 percent. 

Under Child Welfare Services: Abandoned Infants Assistance was cut by almost 17 percent; Teen Pregnancy Prevention Discretionary Grants were cut by 17 percent.

Under Services for the Elderly: Caregiver Services were cut by 21 percent.

Under Health: Rural Health Programs were cut 28 percent.

Under Disabilities: Voting Access for People with Disabilities was cut 74 percent. 

And so on.

These kinds of programs are “designed to get people and communities back on their feet,” Weinstein said. “Mental health services, public health services, a number of education programs, juvenile justice programs — they all have really been slashed.”

“I don’t think its fair to say that [the government] replaced [these] of programs with a like amount of similarly effective programs,” she said. “These are damaging cuts.” 

And it would seem that when the budget needs to be cut, programs for the most vulnerable are often the first to go. 

[Vinnie Rotondaro is NCR national correspondent. His email address is] 

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