The article you’re about to read is from our reporters doing their important work — investigating, researching, and writing their stories. We want to provide informative and inspirational stories that connect you to the people, issues and opportunities within our community. Journalism requires lots of resources. Today, our business model has been interrupted by the pandemic; the vast majority of our advertisers’ businesses have been impacted. That’s why the DP Times is now turning to you for financial support. Learn more about our new Insider’s program here. Thank you.

Straight Talk By Al Jacobs

By Al Jacobs

For those of you whose memory reaches back to 2010, you’ll recall the nation’s economy was not then vibrant. More to the point, the Dow Jones Industrial Average had fallen over 6,000 points in the prior 17 months and the housing industry lay in shambles. The United States Congress came to the rescue, aimed at shoring up real estate lending practices by enacting the Dodd-Frank bill.

With regulatory oversight the intent, this 2,319-page law, signed into law by President Obama on July 21 of that year, established a myriad of regulatory committees promulgating programs to which banks thereafter adhered. Although those rules masqueraded as reform, most were as convoluted as they were arcane. The results were predictable: duplicative and often contradictory rules which promoted neither safety nor soundness. Mortgage lending became a nightmare with layers of red tape so burdensome that many potentially profitable firms simply abandoned the banking business. Only the mammoth institutions, with direct links to the federal regulators and the U.S. treasury, prospered.

Of the nearly 500 banks headquartered here in 1994, less than 180 remain. The smallest ones maintain too few assets to keep up with the ever growing compliance costs. It’s for this reason the community banks, accounting in 1994 for nearly half of the California’s banking, are now down to just 11 in number.

I’d now like to convey my complements to then-Senator Thomas Dodd, retired Congressman Barney Frank, former President Obama and the congressional staffs which foisted this monstrosity onto the law books. By putting out of business almost all the community banks here in the Golden State, where my private mortgage loan firm operates, virtually all my competition is now gone. The muscle-bound giants that still process loans, such as Chase, Wells-Fargo and Bank of America, must do so in compliance with the Dodd-Frank rules. As the loans generated by my non-chartered company are exempt from these bizarre requirements, I can easily outmaneuver the few remaining behemoths.

I’m not sure if there’s a moral here, but I’m at least willing to offer thanks to legislative lunacy in facilitating my profitable enterprise.

Al Jacobs, a professional investor for nearly a half-century, distributes a monthly newsletter in which he shares his financial knowledge and experience. You may view it on

Trustworthy, accurate and reliable local news stories are more important now than ever. Support our newsroom by making a contribution and becoming a subscribing member today.

About The Author Dana Point Times

comments (5)

  • Al – I’m a supporter of Dodd-Frank because I believe it prevents large financial institutions from placing our economy in danger of a repeat of the financial meltdown that caused the Great Recession. But I admit to not being an expert on the financial industry, and you clearly are. So I would love to hear your thoughts on how to accomplish that goal in ways different from Dodd-Frank. Sincere question.

  • Glass Stegal could have handled the situatiion and it’s repeal could be argued caused the bailouts to be required in the first place. It was and is argued that it’s repeal was necessary to accommodate modern banking allowing the US to compete globally with the likes of London, Tokyo and a few others. Glass Steagall could have been revised with addendums to allow banks to create isolated separate entities to allow them to do investment banking with better informed consent to bank customers and accommodating banking to work with the new entity but with firewalls. Obviously a complicated subject. The chairman of Citibank was a main driver of the repeal and later said his pushing for GS repeal is one of the biggest regret smog his life. he said this before the last bank calamity. Anyway, assuming self serving motives for banks and Congress is hardly unjustified based on past events. We mere mortals are not really consulted in events of this scale anyway.

  • Compliments. Chris Dodd.

  • Since when did sarcasm and deception become “Straight Talk?” Since the election?

    The number of pages in a law is irrelevant to the validity or merit of the law.
    Your ability to sort through the convolutions is also irrelevant.
    The number and size of remaining businesses is also irrelevant.

    The Dodd Frank regulations, like many regulations are not perfect. However, in principle, they are intended to protect the public. You attack the entire role of government (regulations) based only upon your own convenience, self interest, and entitled sense of indignation.

    A change was needed for public protection, because the people managing the system were corrupt, incompetent, or predatory. A willingness to take advantage of opportunities does not make you valuable to the community or entitled to a profit. Some businesses are simply unnecessary or bad for consumers. It is a clear role of government to limit the opportunities for anyone to take unfair advantage of the public.

    If there is no profit after compliance, maybe that business has no business.

    Who still believes that Google does no evil?

  • I guess I didn’t make my point very well. I’m not against regulation. I’m not looking for an argument. I’m pointing out that a solid protective firewall was eliminated, Glass Stegall (government regulation), and replaced by a piece of legislation so large it’s practically, and I mean practically in the literal sense, can not be enforced or adhered to without a bank of lawyers, Even then I’m not convinced it can be followed. Small and mid-size banks are disappearing for a reason and a lot of that is inability to comply with so many rules. I have zero desire to allow banks to play games with depositor money in speculating,on markets and such things. Same goes for insurance companies. Dodd Frank is not done yet either. Still being written. I don’t believe Google does no evil but as I know evil is in the eye of the doer. Anyway I agree with you but disagree on the path to be taken. Simple is always better. IMO the more specific the law, the better the road map for charlatans,to navigate around the rule.

comments (5)

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>