Former U.S. Rep. Barney Frank, a Maine resident who co-sponsored sweeping financial industry reforms in 2010 that President-elect Donald Trump has vowed to repeal and replace, said doing so would be harmful to consumers.

Frank said rolling back key components of the Dodd-Frank Act, passed in the wake of 2008’s financial industry meltdown, could give rise to a repeat occurrence of that crisis. The goals of Dodd-Frank include promoting the financial stability of the U.S., curtailing speculative investments by financial institutions, and increasing transparency and accountability among banks, investment firms and insurance companies.

But representatives of Maine’s banking industry said Dodd-Frank has not worked as intended. Instead, they said it has created onerous requirements that have made it especially difficult for smaller financial institutions and their customers. They noted that small community banks and credit unions were not responsible for the mortgage crisis that sent the U.S. into an economic tailspin.

Frank said it’s impossible to discern at this point what Trump intends to do, because he has at various times talked about both cracking down on Wall Street and wiping out existing regulations for banks and investment firms.

“There’s a certain incoherence in his approach,” Frank said in a telephone interview Friday. “I don’t know. … I don’t think he does. How can I know more than he does about his intentions?”

Frank, the former chairman of the House Financial Services Committee, suggested that it’s possible after Trump has had time to examine Dodd-Frank in more detail, he might recognize the value of its various consumer protections. The complex legislation is roughly 2,300 pages long.

“I think it’s more popular to talk about getting rid of regulations in general than it is to get into the specifics,” Frank said.

INHERENT PROTECTIONS

After an in-person discussion with President Obama about the Affordable Care Act, Trump backed away from his initial claim that he would do away with all of it.

Since the meeting with Obama two days after the election, Trump has acknowledged some of the Affordable Care Act’s positive attributes, including a provision that requires health insurance providers to extend coverage to those with pre-existing medical conditions, and another that allows young people to continue receiving coverage under their parents’ health insurance plans until they turn 26.

“It’s going to be kind of like Obamacare,” Frank said of Trump’s likely reaction after examining Dodd-Frank.

William Lund, superintendent of the Maine Bureau of Consumer Credit Protection, agreed with the former Massachusetts congressman that Dodd-Frank, co-sponsored by former Senate Banking Committee Chairman Chris Dodd, contains some important protections for consumers. Chief among them, he said, is the law’s creation of the Consumer Financial Protection Bureau, a federal agency responsible for protecting consumers from exploitation by the financial sector.

“The CFPB has done some very good consumer protection work in its relatively short existence, including the recent uncovering of the results of incentive-based marketing programs at Wells Fargo,” Lund said. “We also support the federal agency’s pursuit of illegal internet-based payday lending operations and abusive debt-collection practices, activities that directly affect many Maine residents.”

Lund also lauded Dodd-Frank for simplifying mortgage lending disclosures and combining them into a single process to make the true cost of a mortgage clearer to the borrowers. Some bankers and real estate agents have complained that the new disclosure process adds paperwork and lengthens the escrow period for home sales, but Lund said they have gotten used to it.

“Lenders and closing agents I talk with are growing accustomed to the new form, and I’m not sure that somehow repealing that form and returning to the old, separate forms would be an efficient process,” he said.

UNNECESSARY RED TAPE

But John Murphy, president and CEO of the Maine Credit Union League, disagreed with the notion that the CFPB and mortgage disclosure changes have benefited members of credit unions.

“Credit unions understand that our members entrust us to properly manage the financial affairs of their credit union, and as a financial institution we certainly expect to operate in an environment that is regulated,” he said. “What we object to is the Consumer Financial Protection Bureau applying the same regulations to credit unions as they do to the multibillion-dollar banks that were the cause of the financial crisis that created the Great Recession.”

Murphy said that for credit unions, which are nonprofit cooperatives owned and operated by the consumers that use their services, it makes “absolutely no sense that our members now have to complete an even larger stack of paperwork than they did 10 years ago when going through the mortgage application and closing process, much of which adds more confusion for consumers, to satisfy new CFPB regulations.”

Chris Pinkham, president of the Maine Bankers Association, agreed with Murphy that some of Dodd-Frank’s provisions are onerous and unnecessary. Pinkham went even further to say that consumers and small businesses do not derive any benefits from the law.

“Because (Dodd-Frank) was created in an atmosphere of significant marketplace disruption, many aspects of the bill have needlessly complicated lending at regulated financial institutions,” he said. “Consumers and small business are paying the price for those changes.”

Pinkham said that because of Dodd-Frank, regulators now hold community banks in Maine to the same compliance standards as major U.S. banks that have complex investments and an international presence.

“This makes no sense from a cost perspective and only increases the costs for products sold to customers,” he said.

Lund, the consumer protection advocate, pointed out that while Trump has vowed to repeal Dodd-Frank, he also has voiced support for its spiritual predecessor, the Glass-Steagall Act of 1933, which separated commercial banks from investment firms. That law was repealed in 1999 under the Clinton administration, and many blame its elimination for creating the conditions that led to the 2008 financial crisis.

“The president-elect’s view supporting a return of this law aligns with the position of many of the nation’s leading consumer protection advocates,” Lund said. “For that reason alone, I think we all need to wait to see the specifics of any (Trump) proposals before reacting.”

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