Econintersect: The Congressional Budget Office reported to the House Subcommittee on Oversight and Investigations that the Dodd-Frank Wall Street Reform and Consumer Protection Act will actually reduce the deficit.
The original cost of the act was estimated to increase the deficit by $19.7 billion through 2020, while the new estimate is is reducing the deficit by $3.2 billion. Econintersect believes these reports are very difficult to read, and would leave lawmakers bewildered on what the financial impact is due to this law.
This is a significant repositioning from a law that was supposed to cost money – to one now which will save money.
CBO estimated that, over the 2010–2020 period, the Dodd-Frank Act would increase both revenues and direct (or mandatory) spending—by $13.4 billion and $10.2 billion, respectively. On net, those effects were projected to reduce deficits by $3.2 billion (see Table 1). The revenues would stem primarily from fees assessed on various financial institutions and market participants. Certain provisions of the act were estimated to increase direct spending by $37.8 billion over the 10-year period; most of those costs, $26.3 billion, would result from a new program created to resolve insolvent or soon-to-be insolvent financial entities, which would be financed through an Orderly Liquidation Fund (OLF). CBO also estimated that other provisions of the act would reduce direct spending by $27.6 billion over that period by decreasing authority for the Troubled Asset Relief Program (TARP) and making changes to federal deposit insurance programs.