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Dodd-Frank a Gift to Big Banks?

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    Former U.S. Ambassador to the European Union C. Boyden Gray on why Dodd-Franks benefits large banks.

  • Duration 4:24
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First presidential debate Mitt Romney pointed out some problems he had with Dodd-Frank regulation.

One is it designates a number of banks is too big to fail and they're effectively guaranteed by the federal government.

This is the biggest -- it's been given that the New York banks have ever seen.

We have somebody who agrees with Romney that Dodd-Frank is a gift to big banks them.

Big kisses he called a joining us now and a Fox Business exclusive is Boyden -- former White House capital.

And former US ambassador to the European Union invested -- is representing Texas community bank.

That is challenging Dodd-Frank in US district court investor great to see -- thanks for coming in.

-- those -- as specific as you cancer in what ways does Dodd-Frank favor the bigger banks over the smaller ones.

Well a couple of major way is the Dodd-Frank act contains.

Massive new regulations.

Which are typically in any industry but especially here.

Much easier for big banks -- big overhead big lawyers big lobbyists to take care of if you're a small back collect our -- little bank -- -- big springs Texas with.

Forty or so employees it makes it very difficult to carry out certain lines of business.

Whether as a big big risks as posed -- all this regulation so that's why I'm sort of big big advantage another.

Is that in fact by allowing.

The government through it doesn't make certain banks -- systemically important.

That gives -- -- funding advantage because it's an implied bail out.

It gives them a funding advantage of these are typically big institutions.

Little community banks like we represent -- get that kind of favoritism.

And so it's another.

Competitive disadvantage they have with the bank it may be just industry.

So what is at the heart of your lawsuit here in essence that it's unfair because of the onerous regulations that.

I mean there are thousands of questions and sub questions that each bank no matter what size -- to deal with.

That there for it it's the little guys could just simply can't afford to keep up pace with this and that it may very well pick winners in just simply making it so difficult for the little ones.

-- that's.

That's -- underlying.

Reality the reason we filed a lawsuit is.

Is this is more constitutional and its nature that is to say there is no oversight of this system which is tilted in favor of the big guys is no.

There's no political oversight the courts are basically cut out the congress has no say.

The White House is prohibited from.

From problem providing oversight even the Federal Reserve board which houses and pays for.

One of the agencies that where pursuing here.

There is prohibited from intervening in -- -- -- try to correct that imbalance so we're talking about a structural constitutional problem where.

The public has no guarantee at all.

Of of the separation of powers which is so much a part of our -- -- And ambassador I think the thing that bothered people the most out of the bailouts most of which by the way have been paid back.

But that the thing that bothered him most is is when the big financial institutions stopped a small commercial banks.

But where they got bailed out by by the taxpayer for their risky bets.

The does Dodd-Frank make those kind of bailouts bailing out the risky bets easier or harder for these big financial institutions to do.

It I'm not sure makes it any easier than it was before but it helps institutionalize.

What.

Was possible before so it could happen again it did not end this problem.

Which was one of the so called promises of the statute was to end this problem but it didn't it actually perpetuates and that in some ways makes it worse.

What what must do think then.

When you see that Mitt Romney has been the recipient of -- more Wall Street money and that includes some of the biggest financial houses.

You know he talked very tough when he said they just in the Dodd-Frank gave them a big kiss and also he makes it sound like you would be a lot tougher on the banks and yet the banks are behaving like they'd get some sort of deal from him because they're all donating -- -- -- Well I don't think I don't think governor Romney's gonna give.

They give them any good deal if he's elected president but the same time also don't think you've got demonize them.

I even knew what he said last week or ten days ago.

Was not the kind of rhetoric which I think is so -- so helpful from.

The -- White House its investor Boyden gray thank you very much for coming -- answer please come back this is again thank you.

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