The Dodd-Frank law passed with the idea of preventing the next big financial collapse and bailout of banks deemed “too big to fail.” Instead, it is concentrating power in those same banks and probably just setting us up for the next banking catastrophe.
This is what happened after the first great campaign against big banks — the one that produced the original Federal Reserve Act of 1913. Woodrow Wilson had campaigned in 1912 against a Wall Street “money trust” that he claimed abetted other trusts. Louis D. Brandeis was the star witness at congressional hearings that year. He emphasized the idea that big banks buffeted monopolies by refusing credit to small competitors. He published his findings in a book, “Other People’s Money and How the Bankers Use It.”
His general point — that money power was concentrated in New York — was fanciful. In fact, New York’s share of the national money market had fallen from 23 percent to 18 percent in the previous decade, and the city had little influence in the national money market. Big national banks grew slowly in number after 1890, and smaller state banks began to outnumber them. It was the large national banks that sought national banking reform, for relief from the proliferation of state bank competitors.