February 14, 2013
Today the Government Accountability Office (GAO) released a report requested by Senator Tim Johnson (D-SD), Chairman of the Senate Banking Committee, and Rep. Michael Capuano (D-MA), entitled “Financial Regulatory Reform: Financial Crisis Losses and Potential Impacts of the Dodd- Frank Act.” Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010 in response to the worst financial crisis since the Great Depression. The law represents significant progress in reining in the big financial firms. It also establishes new, robust financial regulations, additional investor protections and the nation’s first consumer financial protection agency.
The GAO report [ Summary | Full PDF Report ] offers a comprehensive analysis of the devastating impacts of the financial crisis as well as the role that the Dodd-Frank Act is playing in addressing the damage. The GAO estimates that cumulative losses could exceed $13 trillion. Losses in household wealth and high unemployment also occurred as a result of the financial crisis.
“Nearly five years after the failure of Bear Stearns, the devastation caused by the financial crisis is still with us,” said Chairman Johnson. “Today, we learned that the crisis cost the American people trillions of dollars, and the losses may exceed $13 trillion. That is a truly staggering sum and a stark reminder of the need to fully implement the Wall Street Reform Act to minimize the risk of another costly crisis. I will continue to work with the financial regulators to ensure that the new law is implemented to promote financial stability and protect consumers.”
“I thank the GAO for this comprehensive report. As the regulations associated with implementing Dodd-Frank move forward, it is important to remember why this law is necessary. During the financial crisis, Congress was forced to take drastic measures to prevent our financial markets from collapsing. Millions of Americans lost their homes to foreclosure. Millions more lost retirement savings and too many Americans found themselves unemployed. The GAO has estimated that the ultimate cost of the financial crisis could exceed $13 trillion. Any costs associated with implementing Dodd-Frank pale in comparison to the trillions of dollars in losses that have already occurred. Congress must ensure that Dodd-Frank is implemented comprehensively and effectively so that the tools are in place to prevent another financial crisis,” stated Rep. Capuano, who first requested this study in July of 2011.
Alison M. Mills (Rep. Capuano) 617-621-6208
Sean Oblack/Sam Gilford (Sen. Johnson) 202-224-7391