Remember the lessons of Dodd-Frank

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When I arrived in Washington in 2009, the American economy was in free fall.

Just a few months earlier, a meltdown in the markets erased trillions of dollars in wealth, and the United States was hemorrhaging 750,000 jobs a month. Families in Connecticut and across the country were feeling the excruciating pain of lost homes and wiped-out savings.

Failure to end forever the irresponsible and reckless behavior that caused the crisis would have been political malpractice and morally intolerable. However, the government also had to be mindful not to damage the most liquid and efficient capital markets in the world, markets that underpin the mortgages, small business loans and retirement security that support American prosperity.

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This balance had to be accomplished in the face of enormous and justifiable anger, and the unrelenting opposition of Republicans in Congress, who spent months trying to blame the crisis on the Community Reinvestment Act and then retreated into a historically repudiated confidence in financial markets’ ability to regulate themselves.

My colleagues in the New Democrat Coalition and I welcomed the opportunity to play a productive role in this process — one that would ensure strong protections for consumers and stability in markets. We joined with former Rep. Barney Frank (D-Mass.), at that time chairman of the House Banking Committee, to develop and pass reforms to fix our financial regulatory system.

As a result of our efforts, New Dems — and all Democrats — completed the most significant overhaul of our nation’s financial regulatory structure in decades, one that imposed tough new rules to level the playing field for the consumer, while preserving the underlying health of the nation’s mechanism for investing savings productively.

Our work resulted in three landmark achievements:

We created a Consumer Financial Protection Bureau (CFPB) to enforce rules to defend Americans from fraud and curb the abuses of the worst actors in the market;

We brought the derivatives market into the light of day for the first time and gave the regulators the power to prevent the abuses in the derivatives market that led to the crisis, and;

We gave regulators the tools and power to address “too big to fail,” a project that continues today as we face ever larger banking behemoths.

Regrettably, Dodd-Frank, and specifically the CFPB, has been under relentless assault since its creation. It took nearly two years for Richard Cordray to be confirmed as the bureau’s director. Worse, the House passed legislation this year — legislation I spoke out against and opposed — that would tie funding for the CFPB to the annual appropriations process, exposing it to members of Congress more interested in standing up for check cashers and payday loan operators than American consumers.

Just a few weeks ago, when the CFPB came before the House Financial Services Committee, I defended the agency against the attacks of my Republican colleagues by highlighting the impact it has had on recovering losses for consumers. Since the bureau was established three years ago, it has recouped $3.8 billion for wronged consumers. The bureau has also leveled fines totaling more than $141 million against bad actors, including scam artists who target senior citizens and check cashers, pawn shops and shadowy lending operations that prey on America’s military families.

As leaders, we have a responsibility to remember the successes of the law, while we work to improve it. Dodd-Frank wasn’t perfect; no law is. But it did make critical reforms that are helping everyday Americans guard against fraud and promoting public understanding of financial products like credit cards and mortgages.

Today, all over the country, markets are reaching new highs, and banks are enormously profitable. But American families and businesses are only beginning to feel like they have recovered from the disasters of irresponsible behavior and unregulated markets. This fact should make obvious to all leaders the need to protect the accomplishments of Dodd-Frank, even as we seek to make it better.

We owe it to the American people, who lost so much in the crisis and the recession that followed it, to ensure that we do.

Himes has represented Connecticut’s 4th Congressional District since 2009. He sits on the Financial Services Committee and is a vice chairman of the pro-growth House New Democrat Coalition.