This is one of those stories that no one is paying attention to because it’s kind of wonky and complicated. But here’s the For Dummies version for people like you and me.
One of the weird things that happened after the deregulation of the financial industry in the 90s is that corporations that had nothing to do with banking saw a way to get filthy rich by pretending to be a bank but not have to follow any of the same laws that banks do. The result? They played a significant role in the Crash of 2008 and needed to be bailed out.
GE Capital was a quintessential example of the rise of shadow banking. In most important respects it acted like a bank; it created systemic risks very much like a bank; but it was effectively unregulated, and had to be bailed out through ad hoc arrangements that understandably had many people furious about putting taxpayers on the hook for private irresponsibility.
One of the things Dodd-Frank did was force companies like GE to play by the same rules as banks and SURPRISE! GE wants no part of it. It’s no fun to play if you have to play fair. So now GE is dropping its “shadow banking” division and the financial industry just got a bit safer.
Exactly what Obama’s financial reform promised to do. But SHHHHHH! Don’t tell anyone!
The funny part about this is that Republicans swore on a stack on Bibles that Dodd-Frank would make banks and faux-financial institutions like GE act even MORE recklessly since they were legally designated as SIFI or “systematically important financial institutions” (translation: Too Big To Fail). Republicans “reasoned” that these companies would rely on the government to bail them out again.
Of course, Republicans were full of it because they knew that Dodd-Frank would impose severe restrictions on “Too Big To Fail” banks and companies. These restrictions would force them to keep enough money on hand to make bailouts unnecessary. Essentially, Dodd-Frank told the SIFIs that they could gamble all they want but they had to be able to pay their gambling debts in full if they crapped out. If there is one thing the rich hate more than poor people, it’s gambling with their own money. Republicans get really sad when the 1% can’t have their cake and eat it, too. And your cake. And his. And hers. And that guy over there’s cake, as well.
Dodd-Frank may not be perfect, but it’s making the world just a little bit safer from the greed and depredations of the rich. And any day that the rich lose a bit of their ability to destroy lives is a good day in my book.