Dodd Frank

“So system three, in my opinion, is, and we took like 125 years to get here. ... Has the potential to be the best system American finance has ever had.”

“Underappreciated, but like Dodd-Frank post the GFC the Durbin amendment literally was like probably one of the core pieces of legislation that created the FinTech industry, right? Like you actually had interchange based business models that could compete enter…”

“Ever since, 2008, as Dodd-Frank came in, being enacted slowly over time, the dealer's balance sheets have just shrunk to be just a shell of what they once were. So They don't inventory bonds or many bonds anymore.”

“So what they did was they put in place a legal regime called Dodd-Frank and a bunch of other regulations that had the result, you know, sitting here 15 years later of the too big to fail banks are now much larger than they were before. So the exact opposite. Y…”

“So this, that caused a massive change and made the system massively safer and sounder. We saw that in the pandemic.”

“That was the history of Dodd-Frank. Like, we don't really know what went wrong in the financial crisis, so let's just go regulate everything, and I think 99% of it was red tape that did not make the world a better place, and some of it Such as the CCAR regulat…”

“Number of new banks in the US, 2009, nothing. Dodd-Frank. Like, that's what happens.”

“Well, we're not talking about SVB because the time limit on that passed at 12 o'clock Eastern time people have got spectacularly upset about it, but in the end, this is actually a kind of a banking industry and a banking regulation story, and I'm not actually …”

“Post Dodd-Frank, financial services companies face more than 50,000 regulations across dozens of federal and state agencies, and that's just in the US.”

“Yeah, it's the DTCC, and a lot of this stuff is actually spelled out in Dodd-Frank. So if you look at Dodd-Frank you'll see descriptions of the VAR charge and the various special charges there.”

“And it turns out the importance of credit rating changes went way up after Reg FD, which is super cool. So that was an example of asymmetric information. Mark recognized that that was important. Why it's an interesting natural experiment is that Dodd-Frank in …”

“After 2008 and nine, there are laws within Dodd-Frank that they can only pay in certain ways. They can't pay on the revenue of the product, but they can pay on the production of the product.”

“Dodd-Frank really neutered the sell side in a very big way. There's just not as many prop tests. They can't hold positions in these things overnight the way they used to, so their balance sheets are under constraint.”

“With Dodd-Frank, this big underserved piece of the market where there's money for super prime and there's money for deep subprime, but everything in between has largely been vacated by the banks and the finance companies.”