6 February 2017
Dodd-Frank an Unintended Assault on Business
By Cliff Moyce
Financial IT features Cliff Moyce, Global Head of the Finance Practice at DataArt, as he examines the stifling effect that Dodd-Frank Act and the Volcker Rule have had on banking and on business funding. Moyce argues for a need to review the recent avalanche of financial regulation.
“Unfortunately, the Act became an unintended assault on lending to businesses with capital adequacy provisions causing banks to stop lending for commerce... In some regions, banks refusing to fund the growth (i.e. not the decline) of small and medium-sized enterprises (SMEs) has become the biggest single cause of business failure.
Another highly ironic unintended consequence of the whole explosion in regulation … has been that it punishes small banks and financial institutions more than the big guys; i.e. the institutions that represent the biggest source of systemic risk are impacted less negatively than those that present almost no systemic risk.
Review and reform is very much required, otherwise our western banking system, business environments and economies will be stuck in a nose dive that could become a death spiral.”