Inquirer Editorial: Street crime

The recent fourth anniversary of the landmark Dodd-Frank Wall Street reform law provides an occasion to remember why such aggressive legislation was needed.

Fueled by years of lobbying and campaign donations from the finance sector, Washington politicians from both parties dismantled regulations intended to prevent a financial meltdown. The result, of course, was the worst such meltdown since the Great Depression.

Millions lost their homes, and those who didn't saw property values decline as neighborhoods were abandoned. The crisis did up to $14 trillion in damage to the economy, according to the Federal Reserve Bank of Dallas, or a staggering $120,000 per household.

Today the economy is recovering, along with real estate and employment. But that shouldn't mean a return of the overconfidence that brought on the recession.

Less than half of the rules implementing Dodd-Frank and guarding against another collapse have been written. The financial industry has fought hard against them, spending $98 million on lobbying and $250 million on campaign donations this congressional session.

Republicans and a few Democrats in Congress have battled reform by introducing 10 bills designed to weaken the Consumer Financial Protection Bureau, the only bone politicians threw to the consumers who took the brunt of the crisis. But the agency has proven resilient. In only three years, it has restored $4.6 billion to 15 million consumers cheated by financial institutions.

But on the Wall Street side of the problem, banks deemed "too big to fail" - those that stand to threaten the entire economy - have actually grown since 2008. Rules aimed at reining them in are stagnating. Also in limbo is a promising bill by Sens. Elizabeth Warren (D., Mass.) and John McCain (R., Ariz.) to separate traditional banking operations from the risky business of investment banking and trading in exotic financial instruments such as swaps.

Back on Main Street, the aftershocks continue. The Inquirer's Rita Giordano reported recently that a cluster of Camden County communities, from blue-collar Fairview to tony Haddonfield, have formed a coalition to urge banks to sell the foreclosed "zombie homes" that are depressing their neighborhoods. Towns mow the lawns and place liens on the properties, but the lenders simply treat the liens as a cost of doing business.

What the towns need is for the mortgage holders to sell the homes to families that will bring them back to life. And the economy needs strong regulations to keep reckless financial practices from ruining it again.