FrankenDodd

I am indebted to http://www.fiercecomplianceit.com/story/can-dodd-frank-create-jobs/2011-09-16 for some of the information in this blog.

Bank of America is cutting 30,000 jobs because of the new banking rules put into effect by Dodd-Frank. This is a law that was put into place by the same people who broke the banks. They were tasked with fixing them. Unlike lawmakers in the 1930’s who put into place sound, practical laws to finally give us a first class banking system, the effects of this Dodd-Frank are plowing through the banking system because rather than breaking up banks and diversifying them so that the credit system of the United States is sound again without massive new bureaucracy, this law keeps banks big and thus the need for massive job killing regulations.

This is why Bank of America is cutting jobs; too much regulation to make its small branch banking profitable. It is also why Moody’s downgraded 3 U.S. Banks - Bank of America Corp, Citi Group and Wells Fargo because Dodd-Frank is designed to make bail-outs less possible, worrying creditors. The big question in all this though is how does all of this help you to get a job?

Now, you are not going to find this advice from Wall Street or other large companies. The reason is that when things deal with legal issues, large firms do not like to talk. Firms don't like to advertise how much compliance laws cost them in profits. And the jobs that are going to be needed are going to deal with the legal aspects of complying with the Dodd-Frank rules and regulations. This means lawyers, compliance officers, legal secretaries, risk specialists and other people who deal with corporate law are going to be needed.

One reason is because of the bad name derivatives have been given. Derivative contracts now have to be written under Dodd-Frank rules. I will not explain a derivative here with fancy word play because a derivative is simply a contract. Or it is someone with money guaranteeing that when 2 parties engage in a contract that they will do the contract. The derivative contract here is a bank insuring two parties doing the contract from fraud for small percentage on a lot of money.

You couldn’t build a billion dollar stadium without derivatives. Would you pour millions of pounds of concrete not to get paid? Would you pay to have the millions of pounds of concrete laid if the rebar was bad?

The thing is that these derivatives contracts now written to comply with Dodd-Frank can mean that a 17 page document can cost a Wall Street firm $ 100,000.

Of course; this is not to imply that everything about Dodd-Frank is bad. It requires banks to have more funds in the vault to back up loans and to use real assets to back the loans up too.

Will jobs at smaller banks make a comeback? The need is always there, but still if you have a job at a little bank, you might want to consider adding to your skills. Learn how to write documents and use word programs like Excel. Talk to career resource people. Banks often have good education programs. And on-line schooling is easy.

In the meantime, Dodd-Frank is a monster that will only grow, like all things out of Washington.

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