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Concern over Expenses Associated with Dodd-Frank Continues to Hinder Job Creation in Financial Markets

The expected cost of new regulations being implemented from financial reform was cited at the SIFMA Dodd-Frank impact Analysis conference as one reason banks are reluctant create new jobs.

"There's a capital strike going on in corporate America," said Larry Kudlow, economist and host of the CNBC program, "The Kudlow Report." Speaking at the conference, Kudlow went on to say banks are "afraid to take the risk of hiring until they know how much that hire is going to cost them as well as how much the new rules are going to cost them."

With more than 300 new financial regulations impacting the way the financial services sector does business, that cost could be considerable.

Kudlow recalled what life was like under President Reagan, when Kudlow was an economist in the Office of Management and Budget and reminded the audience that Washington hasn't had a budget in three years. Under Reagan there was considerably less regulation and the economy was stronger. In answer to a question from the audience, Kudlow also said he thought there could be a government shutdown if the debt ceiling crisis isn't resolved but he doubted the U.S. would default on its debt.

While the theme of stymied growth in job creation carried through many of the panels throughout the day, there were a few notable exceptions. Lee Olesky, CEO and Co-founder of Tradeweb, said his firm was "looking for qualified people who could help them deal with the new regulations that will change the way OTC derivatives are traded."

Edward Pinto, Resident Fellow at the American Enterprise Institute for Public Policy Research said he expected further consolidation in the mortgage finance area.

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AUTHORAnonymous Insider Comment
  • An
    Angela
    28 July 2011

    First we see that the companies including financial firms are makeing record profits; the next we hear is that Dood-Frank is causing firms to curtail hiring due to cost. So, what happend to all the profits? Squandered? Sr. manager bonuses? Were there really any profits to begin with?

    I think this is a lame excuse presented by managers who don't like curtailed profits at the expense of prudence as offered by regulations. The banks and financial firms are actually benefiting from regulation as it curtails risk taking and maintains the integrity of the financial market.s

  • ja
    james
    25 July 2011

    Instead of mouthing off, if simpler regulations had been followed maybe there would not be a need for Dodd-Frank

  • Ri
    Richard M.
    25 July 2011

    This entire article is nothing but a lot of speculative ideological tripe. Your source is Larry Kudlow??? -- Wow! Stop the presses! Larry Kudlow is making a pronouncement on why banks are not hiring! Of course, Kudow does not cite any authoritative report, he just waxes piningly about the days of Reagan, when life was all grand in the Land of Milk and Honey.

    Good grief--give us a break already!

  • Li
    Lisa
    25 July 2011

    "afraid to take the risk of hiring until they know how much that hire is going to cost them as well as how much the new rules are going to cost them."

    Banks are not afraid of the risk to hire new people. They are afraid that with new financial reform in place, they can't get away with all that they've gotten away with in the past. Current employees are doing the jobs of 2 and 3 people, working longer hours, and having no life-balance. Since when do the banks care about their employees or anything else besides the bottom line.

  • Ri
    Rick
    25 July 2011

    Kudlow is reflexively anti-rule, anti-regulation. Today he's banging the "no rules or it will cost jobs" drum. I'm surprised you even quote him. You don't suppose the sub-par recovery after the super-sized recession might be having an effect on hiring, do you?

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