What’s Up With Jeb Bush’s Weird, Wonky, Totally Wrong Riff on Dodd-Frank?


Jeb Bush said a peculiar thing last night:

What we ought to do is raise the capital requirements so banks aren’t too big to fail. Dodd-Frank has actually done the opposite, totally the opposite, where banks now have higher concentration of risk in assets and the capital requirements aren’t high enough. If we were serious about it, we would raise the capital requirements and lessen the load on the community banks and other financial institutions.

The is peculiar for two reasons. First, it’s unlikely that most viewers had the slightest idea what he was talking about. Second, he has things exactly backward. In fact, Dodd-Frank mandates higher and safer capital levels, and it does so largely because of a Republican amendment to the act.

Basically, Dodd-Frank instructed the Fed to issue new capital rules, which it did in 2013. These rules took into account both the new Basel III requirements as well as Dodd-Frank’s changes, and specifically mandated higher capital requirements for big banks than for smaller community banks. In 2015, the Fed went even further, creating capital surcharges for the nation’s largest banks. Here’s the result:

Not all of this increase in capital is a consequence of Dodd-Frank, but much of it is. And certainly it’s completely untrue that Dodd-Frank has done “totally the opposite.” I wonder what Bush was thinking? This is hardly a big conservative hot button. In fact, most people have never heard of bank capital and have no idea what it means, which means there’s hardly any point in making up stuff about it. And if the only goal was to criticize Dodd-Frank, there are far better ways to do it.

If Bush had wanted to argue that Dodd-Frank didn’t go far enough, and we needed even higher capital requirements for big banks, I would have cheered him on. But that’s not what he said. Very strange.

DOES IT FEEL LIKE POLITICS IS AT A BREAKING POINT?

Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

Thanks for reading—whether or not you can pitch in today, or ever, I'm glad you're with us.

Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

Share your feedback: We’re planning to launch a new version of the comments section. Help us test it.