Dodd-Frank Signed Into Law
Last week President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. Concerns that the newly created Consumer Financial Protection Bureau will result in a flood of federal mandates detrimental to startups and small businesses were alleviated slightly by a handful of protections. In particular, the Snowe-Pryor amendment that forces the CFPB to include recommendations from a 'small business advocacy panel' with any proposed rules changes. The provision also requires the CFPB to "inform the public of how its rules affect small business access to credit."
One of the things that you may be hearing is that while the Dodd-Frank legislation was designed to remove taxpayer support for the too-big-to-fail financial institutions, an unintended consequence may be the suffering of smaller regional banks as a result of "credit rating downgrades," according to an analysis by DailyFinance.
Venture capital appears to be the big winner. An article in The Street claims that "venture capital funds are feeling good about the bill" because they are not subject to costly registration and compliance requirements. The article continues, "Venture capital needs all the help it can get these days. The IPO market is still relatively slow, and companies and buyout firms’ reluctance to spend on, or succeed in getting financing for, acquisitions has made it tough for VC funds to exit their investments and return investors their money."
Will Dodd-Frank and the new CFPB reduce net new jobs in the US? Let's hope not.