Barney Frank: Trump’s Plan to Kill Wall Street Reform Act Could ‘Crash’ the Financial System
When President Donald Trump signed an executive order Friday to peel back the 2010 Dodd-Frank Wall Street Reform Act, the big banks rallied. Shares of the seven largest by market capitalization on the S&P 500 shot up by $35.4 billion, Fortune’s Lucinda Shen reported.
But now Barney Frank, one of the authors of the act, has said that dismantling its safeguards on banks’ abilities to accrue enormous debt and take on risky loans could place the entire financial system at risk, CNN Money reports.
“You would have what led to the 2008 crash,” Frank told CNNMoney, Tuesday, “At some point, all of that unrepayable debt causes the system to crash.”
Dodd-Frank limits Wall Street’s ability to take the sort of risks that led to the 2008 Global Financial Crisis. It has not been perfect, Frank conceded during the interview, but Trump had provided no evidence to support trashing it.
“Calling it a ‘disaster’ is just not rational conversation,” Frank said. “If we had inflicted a disaster on the American financial system, it would have shown up. There’s just nothing to it.”
For more on Dodd Frank, watch Fortune’s video:
Frank is not the only financial expert issuing dire warnings about the repercussions of nixing Dodd Frank.
In a CNBC op ed last week Bart Chilton, Commissioner at the US Commodity Futures Trading Commission from 2007 to 2014, wrote that repealing the law, which “protects consumers, markets, our economy and our nation” would be a “monumental mistake.”