It is a great honor and pleasure to be asked to testify today. I am especially honored to sit at the witness table with Peter Wallison and Congressman Brad Miller. Peter Wallison has been the strongest and clearest voice on the subprime crisis and has contributed more to our understanding of that problem than anyone.
Former US Senator Chris Dodd (D-CT) speaks at a news conference marking the fifth anniversary of the passing of the Dodd-Frank Wall Street reform law, on Capitol Hill in Washington July 21, 2015. Reuters
Many of you know I have a long and deep relationship with your Chairman. Long ago and far away I taught him Money and Banking at Texas A&M, and as any old teacher would, I take great pride in the job he has done and the man he has become.
By any measure we are today experiencing the weakest recovery of a post war era. Had this recovery simply matched the strength of the average of the other ten recoveries since World War II, 14.4 million more Americans would be working today and the average income of every man, woman and child in the country would be $6,042 higher. The incomes of the poor, = middle income workers, women and minorities have fallen even during the recovery, an unprecedented event. All this economic carnage has occurred despite a doubling of the Federal debt and an expansion of the Federal Reserve Bank balance sheet and the monetary base at rates never before witnessed.
Five years after the enactment of Dodd-Frank, the causes and effects of the failed recovery can be seen throughout the banking system. Monetary easing by the Fed has inflated bank reserves but has barely increased lending. Today banks hold an extraordinary $29 of reserves for every dollar they are required to hold. In the first quarter of 2015 banks actually deposited more money in the Fed ($65.1 billion) than they lent ($52.5 billion).
More analysis and commentary on the Dodd-Frank Act
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