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A Look Back at the Dodd-Frank Wall Street Reform and Consumer Protection Act - YouTube
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- One lesson I think for, you know,
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anybody who's aspiring to
leadership is recognizing that
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oftentimes events choose you.
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You don't choose events.
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(upbeat inspirational music)
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in January of 2009 when I was inaugurated,
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we were going through the worst
economic contraction since
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The Great Depression and
the financial system had
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essentially shut down.
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The first thing to understand
is the full context of how the
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financial crisis came about.
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- In a way it starts all the way
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back in the 1930s in the Great Depression.
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The United States creates a
whole regulatory structure of
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rules of the road that are gonna
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apply to financial institutions.
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But by the '80s and '90s
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there was a huge effort
to deregulate finance.
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- The mortgage companies
took the simplest thing.
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The 30 year fixed rate mortgage.
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They made it real short.
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Like you refinance it every two years
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and you have an interest
rate that's real low
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at the beginning called a teaser rate.
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And then it jumps up and we
don't actually find out if
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people can afford to pay for it.
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But it wasn't unique to mortgages.
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Loans for cars or using credit cards.
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A lot of people were getting
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systematically taken advantage of.
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- People borrowed 100%
or more of the value
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of their house in a mortgage.
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And then the price of
housing began to collapse.
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- Essentially it was a big house of cards.
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And what you started seeing
in 2007 is that that house of
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cards started to crumble.
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In a panic, people started
pulling back on lending.
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Suddenly employers couldn't make payroll.
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And so you had this compounding failure.
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- And those things fed on themselves,
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raising the risks that
the economy would fall
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into a great depression
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and the financial system would collapse.
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- Our first job was to stop the bleeding
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and kickstart the economy,
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which is why we immediately
started a stimulus package
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called the Recovery Act
that put people to work,
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increased demand, provided tax cuts,
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started major construction projects,
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helped States with their budgets.
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- The key thing about about the
president in this period was
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his ability to take the long
view and recognize that even
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while the fires of the
crisis were burning,
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we had to put in place a set of reforms
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and safeguards that would reduce the risk
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it would happen again.
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- There were a series of systemic flaws
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in the financial system
and how we regulated it
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that we had to get fixed.
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And that was the goal of Dodd-Frank.
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My administration is proposing
a sweeping overhaul of the
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financial regulatory
system, a transformation
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on a scale not seen since the reforms
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that followed the Great Depression.
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- The big question was
what will be in Dodd-Frank?
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- Yes, it's a Wall Street reform,
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but it is called the Dodd-Frank act.
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Dodd is his Senator,
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Chris Dodd and Frank is
Congressman Barney Frank.
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They were the chairs in Congress
that oversaw getting the
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legislation through Congress
and onto the president's desk.
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- They carried all the burden really
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of trying to reach consensus
among the many competing
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ideas and concerns and
preferences in their caucuses.
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- Elizabeth Warren had this
idea for a Consumer Financial
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Protection Bureau, and we included that
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as part of Dodd-Frank.
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- We had a whole bunch of agencies,
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each one of which owned like
a little piece of protecting
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consumers and the
consequence was for no agency
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was it their first job.
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- The Consumer Financial Protection Bureau
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will be a watchdog
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for the American consumer.
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- The big banks spent a fortune
lobbying against Dodd-Frank.
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They tried everything
they could do to convince
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the folks in Congress oh, we
learned we won't do it again.
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- What we've seen so far in
recent weeks is an army of
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industry lobbyists from Wall Street
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descending on Capitol Hill.
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If these folks want a fight,
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that's a fight I'm ready to have.
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- There were lengthy hearings.
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There were people from all sides
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that had the opportunity
to come and testify.
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- The president announced the
Wall Street reform more than a
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year before the bill ended up on his desk.
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Largely because those that
had contributed to the crisis
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were still resistant to reform.
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It took the president and it
took people pushing hard from
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both the inside of government
and outside of government to
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make reform actually happen.
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And ultimately the bill that
reached the president's desk
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was 800 pages long and included
hundreds of new regulations
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that reordered the financial
system and created the
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Consumer Financial Protection Bureau.
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- This was the toughest set
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of financial regulations
since the Great Depression.
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- Before the CFPB, if people had a dispute
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with their financial institution
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and they didn't know what to do about it,
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and then they couldn't afford
a lawyer or they couldn't
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afford legal help.
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There really was nowhere in
our country for them to call
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directly to get assistance
with that issue.
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The Consumer Financial Protection Bureau
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has already forced the giant
financial institutions to
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return more than $12 billion directly
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to people they cheated.
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So the next time you take out a mortgage,
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the next time you get a credit card,
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the next time you go to your
bank and you've got a checking
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account or a certificate of
deposit and you don't get
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cheated just remember,
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part of the reason is because
there's a cop on the beat
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to make sure everybody's
following the rules.
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- One of the things that I've
benefited from greatly in
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managing this crisis was
that we had a collection
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of extraordinarily smart, dedicated people
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who were willing to make
great personal sacrifices
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and work together.
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But there's also a broader
lesson that I think speaks to our
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time as much as it did a decade ago.
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And that is that our
work is never finished.
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Part of the reason that
you had a crisis in 2007,
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2008 was because there
had been underlying trends
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that had been taking place for decades.
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You know, each generation
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of leadership has to tackle
a piece of the problem.
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That's one of the reasons
why at the Foundation,
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our focus is on developing
the skills and the talent
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of young people who are working
on a whole host of issues
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because their work's never done.
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And hopefully the skills and
training and insights that they
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develop and the experiences
they have and the challenges
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they confront, that will then
give them the tools they need
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not only to succeed,
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but also then pass it
onto the next generation.
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And we keep on handing off the baton,
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then things get better.
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Progress happens and and we can look back
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with pride in terms of
what we accomplished.
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