Committee on Financial Services

Jeb Hensarling

Hearing entitled “Allegations of Discrimination and Retaliation and the CFPB Management Culture”

2014/07/25


Markup of H.R. 5018, the Federal Reserve Accountability and Transparency Act of 2014; H.R. 4329, the Native American Housing Assistance and Self-Determination Reauthorization Act of 2014; H.R. 3240, the Regulation D Study Act; H.R. 3913, to amend the Bank Holding Company Act of 1956 to require agencies to make considerations relating to the promotion of efficiency, competition, and capital formation before issuing or modifying certain regulations; H.R. 4042, the Community Bank Mortgage Service Asset Capital Requirements Study Act of 2014; and H.R. 5148, the Access to Affordable Mortgages Act of 2014

2014/07/25


FSC Majority | Week in Review

2014/07/25



Committee Reviews the Dodd-Frank Act on its 4-year Anniversary
                                                                                
On Wednesday, the full committee held a hearing to assess the impact of the Dodd-Frank Act on America’s Main Street economy and hard-working American taxpayers on its 4th anniversary of being signed into law.

"It wasn’t deregulation; it was bad regulation that helped lead us into this crisis. So if you get the wrong diagnosis you get the wrong remedy. Dodd-Frank has been the wrong remedy, adding incomprehensible complexity to incomprehensible complexity," said Chairman Jeb Hensarling (R-TX). "So at the time Dodd-Frank was passed, we were told it would would 'lift the economy,' 'end too big to fail,' 'end bailouts,' 'increase financial stability' and 'increase investment and entrepreneurship.' And instead, what have we learned? We have learned that it is now official that we are in the slowest, weakest recovery in the history of the nation. Tens of millions of our countrymen now unemployed or underemployed. Negative economic growth in the last quarter. Business startups at a 20-year low. One out of seven dependent upon food stamps."

"The House Financial Services Committee has moved numerous regulatory relief bills, a number of which have actually passed with bipartisan support; none of which I recall being taken up by the Democratic Senate," added Chairman Hensarling.

Mr. Dale Wilson, a community banker from San Diego, Texas provided a first-hand account to the committee of how Dodd-Frank's "excessive regulation and government micro-management" has forced banks to consolidate due to the inability to "maintain profitability in an environment where the regulatory compliance costs are increasing between 50 and 200 percent."

"The real costs of the increased regulatory burden are being felt by small town borrowers and businesses that no longer have access to credit. When a small town loses its only bank, it loses its lifeblood. It's more difficult to improve schools, health care facilities, and other infrastructure projects. I know it was not the intent of Congress when it passed Dodd-Frank to harm community banks, but that is the awful reality," said Mr. Wilson.

Paul Kupiec, a former FDIC official and current Resident Scholar at the American Enterprise Institute, also testified at the hearing and debunked the myth asserted by Dodd-Franks supporters that Dodd-Frank ended “Too Big to Fail.”

“Ironically, Dodd-Frank’s heightened expectations of a government’s commitment to remove the possibility of a future financial crisis may increase the probability that such a crisis will occur and require government support for the largest financial institutions that have been identified as too-big-to-fail,” said Kupiec.

Subcommittee Examines the SEC's Division of Corporation Finance

On Thursday, the Capital Markets and Government Sponsored Enterprises Subcommittee held a hearing to examine the SEC's Division of Corporation Finance. This was the second in a series of SEC oversight hearings.

"It is unfortunate indeed that the SEC still does not embrace its mission to promote capital formation with as much zeal and enthusiasm as it does with Dodd-Frank. Our markets and economy are worse for it," said Subcommittee Chairman Scott Garrett (R-NJ).

"At a time when small businesses continue to struggle to raise capital and investors are having difficulty earning a return on their investment, the SEC should not harm small business job-creators or the investing public by reducing the amount of participants in this field eligible for private placement," added Chairman Garrett.

"The JOBS Act and numerous bipartisan bills that have passed out of this committee highlight the fact that the SEC needs to do more to promote capital formation through common sense updates to its regulations," said Rep. Robert Hurt (R-VA).        


MEMBER SPOTLIGHT

Rep. Patrick McHenry | Four years after Dodd-Frank fix, system still broken 

Among the great indignities of the financial crisis: American families were footing the bill for the massive taxpayer-funded bailouts of Fannie Mae, Freddie Mac and other large financial institutions while struggling to scrape by in the broken economy. In 2009, Bloomberg estimated that the U.S. government and other federal agencies had committed nearly $13 trillion to support these failing institutions. The nearly $13 trillion represented 90% of the U.S. gross domestic product for 2008. In signing the law, Obama claimed that never again would the American people foot the bill for these large firms. Yet amazingly Dodd-Frank does not just fail to end these bailouts, it cements them into law and greatly increases the likelihood the American people will be stuck with the federal government's bailout tab again in the future.

Weekend Must Reads


Fox News | Derailing the American Dream since 2010: Thanks a lot, Dodd-Frank

Dodd-Frank and the rest of Washington over-regulation help explain why the U.S. economy today is $1.6 trillion smaller than what an average economic recovery over the last 50 years looks like. This lackluster performance explains why a family of four today is missing more than $1,100 in after-tax income and why there are nearly 6 million fewer jobs compared with the average recovery. The answer is less Dodd-Frank, less red tape and more free enterprise and economic freedom. Free enterprise has lifted more people out of poverty than all the government anti-poverty programs combined. It is the only economic system that frees ordinary people to achieve extraordinary results.

Citizens Against Government Waste | CAGW Names CFPB Director Richard Cordray July Porker of the Month

He singled out window replacement, plumbing and electrical upgrades, and a new roof as cost centers for the renovations, yet plans for the building also include such luxurious amenities as an indoor waterfall, a four-story glass staircase, a sunken garden, a custom “green” roof, and stools commissioned from world-renowned sculptor Maya Lin. The building, which is being rented, was accepted in “as is” condition by CFPB officials, and will not even house all of the CFPB’s staff. The renovation will cost approximately $590 per square foot, which is more than double the average cost for renovating some of Washington’s most high-end office buildings. According to the House Financial Services Committee, “…the CFPB is spending much more per square foot than it cost to build the Trump World Tower ($334/square foot), the Bellagio Hotel and Casino ($330/square foot) and the Burj Khalifa in Dubai ($450/square foot).” The latest estimated cost of $215.8 million is 37 percent greater than the value of the building, which was appraised at $157.3 million in 2011. House Financial Services Chairman Jeb Hensarling (R-Texas) has demanded that Director Cordray produce “full, unredacted” records related to the escalating costs for the building renovation by July 31, 2014.

Washington Times | At 4, Consumer Financial Protection Bureau is still unaccountable

The bureau's head, currently Richard Cordray, cannot be fired, no matter how poor his performance. He's armed with unlimited authority, enabling him to splurge on luxuries. He spent $216 million redecorating the bureau's headquarters with such amenities as a two-story waterfall and a glass staircase. The "consumer protection" bureau is now worth more per square foot than the Bellagio Hotel in Las Vegas or the opulent Burj Khalifa in Dubai, where a guest can sleep in a room designed by Giorgio Armani for $7,000 per night (if he can sleep at all after paying $7,000 for a place to sleep).

Investor's Business Daily | Four Years In, Dodd-Frank Hasn't Fixed Anything

"Ironically, Dodd-Frank's heightened expectations of a government commitment to remove the possibility of a future financial crisis may increase the probability that such a crisis will occur and require government support," former FDIC official Paul Kupiec, now with the American Enterprise Institute, testified this week. Meanwhile, nonbanks such as GE Capital, GMAC and other industrial finance companies came under the government's heavy regulatory hand for the first time ever. New agencies like the Consumer Financial Protection Bureau, which now controls all consumer lending, and the Financial Stability Oversight Council, a super-regulatory board with sweeping powers and no direct accountability to Congress, have become a dead hand.
 
    On the Horizon 

July 29, 2014 10:00 a.m.
Full Committee Markup

"Markup of H.R. 5018, the Federal Reserve Accountability and Transparency Act of 2014; H.R. 4329, the Native American Housing Assistance and Self-Determination Reauthorization Act of 2014; H.R. 3240, the Regulation D Study Act; H.R. 3913, to amend the Bank Holding Company Act of 1956 to require agencies to make considerations relating to the promotion of efficiency, competition, and capital formation before issuing or modifying certain regulations; H.R. 4042, the Community Bank Mortgage Service Asset Capital Requirements Study Act of 2014; and H.R. 5148, the Access to Affordable Mortgages Act of 2014"

July 30, 2014 3:30 p.m.
Oversight and Investigations Subcommittee Hearing

"Allegations of Discrimination and Retaliation and the CFPB Management Culture"


  In the News

Wall Street Journal | House Republicans Take Aim at Dodd-Frank

Wall Street Journal | Dodd-Frank Law Still Far From Finished

Wall Street Journal | Four Years of Dodd-Frank Damage

American Banker | DOJ Memo Leaves No Doubt About Choke Point’s Motives

American Banker | In Year Four of Dodd-Frank, Over-Regulation Is Getting Old

Washington Examiner | Jeb Hensarling panel demands 'full, unredacted' records on CFPB's rising renovation costs

Washington Times | MORICI: Yellen’s denials of rising inflation

Wall Street Journal | John Taylor's Reply to Alan Blinder

Wall Street Journal | The Lingering, Hidden Costs of the Bank Bailout

Politico Pro | McHenry to Ex-Im: Show me, don’t tell me

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Financial Services Committee To Hold Markup, Will Hear From CFPB Director Cordray in Ongoing Probe of Discrimination

2014/07/25

House Financial Services Committee Chairman Jeb Hensarling (R-TX) today announced the committee’s schedule for the week of July 28th.

Tuesday, July 29th at 10:00 A.M.- A Full Committee markup of six bills, including legislation that will bring much needed transparency and accountability to the Federal Reserve and provide regulatory red-tape relief to community financial institutions.

A full list of the bills can be found here.

Wednesday, July 30th at 3:30 P.M. – As part of the committee’s ongoing investigation into allegations of discrimination and retaliation at the CFPB, the Oversight and Investigations Subcommittee will receive testimony from CFPB Director Richard Cordray.

The Subcommittee has held three hearings as part of its investigation of the CFPB.

April 2: CFPB attorney and whistleblower Angela Martin testified about the CFPB’s “pervasive culture of retaliation and intimidation,” saying she and her colleagues “have suffered and are suffering at the hands of inexperienced, unaccountable managers.” Martin also testified that after she filed an Equal Employment Opportunity complaint, Cordray “called me at night and told me that I have to tell my attorneys to back down.”

At this same hearing, the Subcommittee heard testimony from Misty Raucci, an outside investigator hired by the CFPB to examine Martin’s claims. Raucci’s investigation concluded that Martin’s claims of retaliation were valid.

May 21: The Subcommittee heard testimony from two subpoenaed witnesses: Liza Strong, the Director of Employee Relations at the CFPB, and Ben Konop, Executive Vice President of Chapter 335 of the National Treasury Employees.

Konop testified that the employees union “alleged that women and minority employees were being underpaid when compared to similarly situated white male colleagues. To date, the Bureau has denied each of these grievances at all stages, often using inconsistent reasoning, despite what I feel is convincing evidence of low pay for numerous women and minority workers.”

At this same hearing, the Subcommittee reviewed a report commissioned by the CFPB and conducted by Deloitte Consulting. That report, delivered to the CFPB in September 2013, noted concerns related to the CFPB’s hiring, staff promotions, performance reviews and employee pay since the Bureau’s inception.

June 18: CFPB Examiner Ali Naraghi testified that he was the victim of a repeated reprehensible ethnic slur and that “favoritism and cronyism runs rampant at the Bureau.” Naraghi further testified that “the culture of intimidation and retaliation” at the CFPB “makes it very difficult for employees to raise concerns about mistreatment, mismanagement and abuse of authority.”

Also on June 18, Kevin Williams, a former CFPB employee, testified: “The frequency and duration of these occurrences, speaking of discrimination, created a hostile work environment for all blacks at the Bureau whether they were unwitting manipulated black managers or mistreated hard-working black employees.”

Both Martin and Williams also testified that one division in the CFPB’s consumer response division that is mostly staffed by African-American employees is internally referred to as “the plantation.”

“African-Americans tell me that it’s extremely hard to leave the plantation,” Martin said, because those employees do not have the same opportunity as white employees to be promoted at the CFPB.

“Rather than allow the plantation workers to compete for vacant leadership positions, my managers hired two white males to oversee us,” Williams testified. “If you were a black employee on the plantation, you were either a team lead or in the field. Not one team lead from my unit was ever promoted to a manager.”

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Chairman Hensarling Calls on President Obama to Immediately Halt Export-Import Bank Deals With Russia

2014/07/25

Financial Services Committee Chairman Jeb Hensarling (R-TX) today sent the following letter to President Obama calling on him to “halt any and all deals the Export-Import Bank is working on with Russia and with Russian companies and to suspend consideration of future Ex-Im deals involving Russia.”

The full text of the letter is below:


Mr. President:

The situation in Ukraine grows worse every day. Russia bears responsibility for this conflict, including the atrocity of the downing of Malaysia Airlines Flight 17, because Russia is supplying the separatists with advanced weapons and encouraging their attacks on aircraft and on the people of Ukraine. Russia’s actions are in direct conflict with our national interests.

Yet, still, the Export-Import Bank remains open for business in Russia. In fact, total authorizations for deals between Ex-Im and Russia have increased nine-fold since you took office. While your Administration announces sanctions on Russian companies on the one hand, on the other it offers sweetheart deals to Russian companies through Ex-Im. Indeed, some of the very same Russian firms that are being sanctioned by the United States have benefitted from Ex-Im: Vnesheconombank (VEB) and Gazprombank – two state-owned Russian banks.

As you know, Congress is in the midst of debating whether to reauthorize the Export-Import Bank. But in the face of growing Russian aggression, Ex-Im’s continuing – and even increasing – connections with Russian companies, many of them run by Vladimir Putin’s cronies, has got to stop and stop immediately.

Section 2(b)(1)(B) of the Export-Import Bank Charter provides the President of the United States with the authority to deny applications for financing that would benefit Russian companies. I therefore ask you to immediately halt any and all deals the Export-Import Bank is working on with Russia and with Russian companies and to suspend consideration of future Ex-Im deals involving Russia.

Increasing economic sanctions on Russia is not a partisan issue. Only two days ago, you received a letter from Senators Robert Menendez (D-NJ), Carl Levin (D-MI), and Dianne Feinstein (D-CA), the Chairs of the Senate Foreign Relations, Armed Services, and Intelligence Committees, respectively. In their letter, they called on you to “give additional consideration to imposing broader sanctions on Russia’s energy and financial industries, as well as other sectors of the Russian economy as appropriate.” I could not agree more, Mr. President, and a good place for you to start is by halting continued Ex-Im activity in Russia.

Sincerely,
Jeb Hensarling
Chairman, Committee on Financial Services

cc:  The Honorable John Kerry, Secretary of State
       The Honorable Jacob “Jack” Lew, Secretary of the Treasury
       The Honorable Fred Hochberg, Chairman, Export-Import Bank
       The Honorable Maxine Waters, Ranking Member, Committee on Financial Services


The letter can be viewed here.

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The Export-Import Bank – Helping Those Who Can Help Themselves, Part Two

2014/07/24

 

The Export-Import Bank just can’t help themselves.

The United Arab Emirates (UAE), a country described as having “a high standard of living because of oil wealth,” sovereign wealth over $1 trillion in assets and a per-capita GDP of over $58,000, decided it needed some new aircraft and turbines.

Who better to help than American taxpayers through the Export-Import Bank?

In FY2013, the Ex-Im Bank offered over $1 billion worth of loans and loan guarantees backed by hardworking Americans’ taxpayer dollars to the UAE to buy aircraft from Boeing and turbines from General Electric.

With this latest deal, U.S. taxpayers have a total exposure of more than $6.2 billion to the oil-rich UAE, all thanks to Ex-Im.

If a country clearly has the means to finance projects without relying on American taxpayers, why should it get money from Ex-Im?

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Chairman Hensarling Comments on Hearing Into Allegations of Ex-Im Corruption

2014/07/24

WASHINGTON- Financial Services Committee Chairman Jeb Hensarling (R-TX) issued the following statement on the announcement that the Oversight and Government Reform Committee will hold a hearing next week to examine allegations of corruption at the Export-Import Bank:

“The allegations of kickbacks and corruption at the Export-Import Bank are as disturbing as they are serious.  At our recent Financial Services Committee hearing on Ex-Im reauthorization, the Bank’s chairman refused to answer repeated questions about whether he was aware of a criminal investigation into these allegations.  So I’m pleased the Oversight and Government Reform Committee is taking this action."

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Egregious Ex-Im Bank Deal of the Day

2014/07/23

 e·gre·gious -- outstandingly bad; shocking.

 The Export-Import Bank – Helping Those
Who Can Help Themselves

Mexican Company Admits It Doesn’t Need Ex-Im’s Help,
But Since It’s Offering…

Mexico-based satellite operator known as Satmex announced it doesn’t need a loan from the Export-Import Bank to finance the purchase of Boeing satellites. 

But that’s no reason not to take the “free money” financed by hardworking U.S. taxpayers through Ex-Im, is it?

In a conference call with investors, Satmex’s CEO Juan Garcia “said the company is nonetheless still working” to receive “a low-interest loan” from Ex-Im for $255.4 million, according to a report in SpaceNews.

If a company can finance a project without Ex-Im, why should it get money from Ex-Im?

 

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BARNEY FRANK AND “DEATH PANELS”

2014/07/23

At today’s Financial Services Committee hearing marking the four-year anniversary of the Dodd-Frank Act, former Committee Chairman Barney Frank proclaimed, as he has on many prior occasions, that the law that bears his name created “death panels” for large financial institutions, which he claims will be “terminated” in the event that they reach the point of failure.  Yet as conclusively demonstrated by a Republican staff report released earlier this week and testified to by a host of experts who have examined the Dodd-Frank Act and its implementation, the former Chairman has his facts wrong.   

Indeed, none other than former Federal Reserve Chairman Paul Volcker has suggested that under the Dodd-Frank Act’s “Orderly Liquidation Authority,” what awaits a “too big to fail” firm that reaches the point of failure is not death, but eternal life, under the auspices of the federal government.  A press account of a December 11, 2013 forum hosted by the FDIC on its “Single Point of Entry” strategy for implementing Dodd-Frank’s “Orderly Liquidation Authority” quotes Chairman Volcker as follows:

“When I read [the “Single Point of Entry” proposal], it doesn’t sound like a liquidating situation,” he said.  It sounds more like the FDIC “takes a little cancer out” and “the rest of it goes on as the Great Universal Bank of the U.S.  A lot of people look at this and they say, ‘This is a fancy way to subsidize or temporarily assist the company so it can continue in its new life.’  That’s what happened last time.”

Source: Barbara Rehm, FDIC’s Own Experts Skeptical of Resolution Plan, American Banker, Dec. 12, 2013.

In addition to Chairman Volcker, numerous financial experts, including two sitting Federal Reserve regional bank presidents, have dismissed the notion that Dodd-Frank will result in the “termination” of firms that are put through the “Orderly Liquidation” process mandated by Dodd-Frank:

Selected witness statements from the Oversight Subcommittee’s May 15, 2013 hearing entitled Who is Too Big to Fail:  Does Title II of the Dodd-Frank Act Enshrine Taxpayer-Funded Bailouts?

“[T]aking a position on the likelihood of bailouts requires defining what one means by bailout, examining the Orderly Liquidation Authority (OLA) of Title II, and assessing-based on practical experience--how it would actually work.  Doing so leads me to take the position that bailouts and too-big-to-fail are preserved rather than eliminated under Title II.

“To see this, first note that while full liquidation with wiped out shareholders was a major selling point of the Dodd-Frank Act-that is the reason for the in “L” in OLA-in the years since the Act was passed the focus of the FDIC has been on how to resolve and reorganize the failing firm into an ongoing concern, rather than on how to liquidate it.”

--John Taylor, Professor, Stanford University

“The single point of entry won’t end Too Big To Fail at all.  It will essentially rescue the troubled financial institution and is designed to ensure that the institution retains just as dominant a position after a financial crisis as before it.”

--David Skeel, Professor of Law, University of Pennsylvania

“The [Orderly Liquidation Fund] will be cheap and will provide great benefit—only the non-systemically holding company creditors will take losses, and the company will emerge from OLA much as it entered, to do it all again.”

--Josh Rosner, noted financial analyst

Selected witness statements from the Committee’s June 26, 2013 hearing entitled Examining How the Dodd-Frank Act Could Result in More Taxpayer-Funded Bailouts

“With regard to Title II, Dodd-Frank described and designates the Orderly Liquidation Authority as the resolution mechanism to handle the disposal of a giant systemically disruptive financial enterprise.  These three letters themselves evoke the descriptive doublespeak of what I consider to be an Orwellian nightmare.  The “L,” which stands for liquidation, will in practice become a simulated restructuring, as would occur in a Chapter 11 bankruptcy.”

 “Whatever you call it, this is taxpayer funding at below market rates.  At the Dallas Fed, we would call this form of liquidation a nationalization of a financial institution.”

--Richard Fisher, President, Federal Reserve Bank of Dallas

“I think it is clear that in the Orderly Liquidation Authority and the use of the Orderly Liquidation Fund, the FDIC has a tremendous amount of discretion in the extent to which they provide creditors with returns that are greater than they would receive in bankruptcy.”

--Jeffrey Lacker, President, Federal Reserve Bank of Richmond

Rep. Lynn Westmoreland:  This question is for President Fisher and President Lacker.  Can Dodd-Frank’s Orderly Liquidation Authority provide the opportunity for more AIG-like bailouts[?]”

President Lacker.  Sure . . . the way that the Orderly Liquidation Authority is envisioned to work, with a single point of entry, a parent company, it envisions providing funds from the FDIC that would let creditors of operating subsidiaries escape losses.  So I have to say that your characterization is accurate, that it could happen again.

Finally, George Washington University law professor Arthur Wilmarth, whom Mr. Frank invited to testify on financial reform when he chaired the Committee, described the implementation of “Orderly Liquidation Authority” this way:  “This doesn’t look like a liquidation.  It looks like a restructuring or reorganization in which the systemically important financial institution survives to fight another day.  Instead of liquidating or breaking up the institution it comes out the other end … looking much like it did before in terms of its functions and operations.” 

Source: Joe Adler, Is the FDIC’s ‘Single-Point Resolution’ Plan a Stealth Bailout? American Banker, Dec. 12, 2013.

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Hensarling on Dodd-Frank’s 4th Anniversary

2014/07/23

“It wasn’t deregulation; it was bad regulation that helped lead us into this crisis. So if you get the wrong diagnosis you get the wrong remedy. Dodd-Frank has been the wrong remedy, adding incomprehensible complexity to incomprehensible complexity.”


CLICK HERE TO WATCH

WASHINGTON- House Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today’s full committee hearing to examine the Dodd-Frank Act on its 4th anniversary:

Dodd-Frank has always been based on upon a false premise that somehow deregulation or lack of regulation led us into the crisis. However in the decade leading up to the crisis, studies have shown that the regulatory burden on the financial services industry actually increased. There were few industries that were more-highly regulated; FDICIA, FIRREA, Sarbanes-Oxley, the list goes on.

We hear a lot about Wall Street greed; I could not agree more. I’m just curious, at what point was there not greed on Wall Street? So I’m wondering how that could necessarily be the determining factor?

What I do know is that affordable housing goals of Fannie and Freddie on steroids and other policies helped incent, cajole, and mandate financial institutions into loaning money to people to buy homes they ultimately could not afford to keep them. My Democratic colleagues at the time said “let’s roll the dice” on housing. They did, and the economy imploded.

It wasn’t deregulation; it was bad regulation that helped lead us into this crisis. So if you get the wrong diagnosis you get the wrong remedy. Dodd-Frank has been the wrong remedy, adding incomprehensible complexity to incomprehensible complexity.

Now frequently in Washington, and I say frequently, regrettably, it is the rule as opposed to the exception, laws are always evaluated by their advertised benefits; not by their actual benefits or actual costs. So at the time Dodd-Frank was passed, we were told it would would “lift the economy,” “end too big to fail,” “end bailouts,” “Increase financial stability” and “increase investment and entrepreneurship.”

And instead, what have we learned? We have learned that it is now official that we are in the slowest, weakest recovery in the history of the nation. Tens of millions of our countrymen now unemployed or underemployed. Negative economic growth in the last quarter. Business startups at a 20-year low. One out of seven dependent upon food stamps.

Again, increasing entrepreneurship? I don’t think so.

Ending too big to fail? We’ve had this debate before. We had it yesterday, we will have it today, we will have it tomorrow. Dodd-Frank codified too big to fail into law, and it is now demonstrable four years later that the big banks have gotten bigger and the small banks have gotten fewer.

Financial stability? I suppose that is a debatable proposition. Financial stability is now defined by the unelected and unaccountable bureaucrats. I don’t know with the increased concentration though in our larger financial institutions whether one can say we have achieved financial stability. But what I do know is it comes at an incredible cost.

Thanks to the Dodd-Frank, it is now harder for low and moderate-income Americans to buy a home.

Again, thanks to Dodd-Frank, there are fewer community banks serving the needs of small businesses and families.

Thanks to Dodd-Frank, Main Street businesses and farmers face higher costs in managing their risk and producing their products, which is impacting every single American at their kitchen table.

Thanks to Dodd-Frank’s Volcker rule, our capital markets are less liquid than before, making it more expensive for companies to raise working capital which harms Americans saving for retirement and children’s’ education.

Thanks to Dodd-Frank, services that bank customers once took for granted like free checking are being curtailed or eliminated.

It is one of the reasons that the House Financial Services Committee has moved numerous regulatory relief bills, a number of which have actually passed with bipartisan support; none of which I recall being taken up by the Democratic Senate.

By the time this Congress is over, the House Financial Services Committee would have addressed Dodd-Frank’s greatest sin of omission, housing finance reform. And working alongside our friends at the Judiciary Committee, who are developing a bankruptcy alternative to the Orderly Liquidation Authority. Before the end of this Congress, we will have also addressed Dodd-Frank’s greatest sin of co-mission, codifying too big to fail and taxpayer-backed bailout funds.

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ICYMI: Derailing the American Dream since 2010: Thanks a lot, Dodd-Frank

2014/07/22


 
 
CLICK HERE TO READ

Published July 21, 2014
By Rep. Jeb Hensarling

President Obama promised the sprawling Dodd-Frank Act he signed four years ago this week would “lift the economy,” “end too big to fail,” “end bailouts,” and “increase investment and entrepreneurship.”

Instead, Dodd-Frank has done the opposite, making it harder for Americans to achieve their dreams for themselves and their families.

Supporters of Dodd-Frank said its 400-plus regulations were needed to fix the “deregulation” that caused the 2008 financial crisis. But regulations on the financial industry actually increased every year in the decade leading up to the crisis. Much of this red tape either required, incented or browbeat financial institutions into making loans to people to buy homes they could not afford to keep.

A great tragedy of the crisis was not that Washington regulations failed to prevent it, but helped lead us into it.

Under Dodd-Frank, the big banks have gotten bigger, the small banks have gotten fewer, and the taxpayer has gotten poorer.

Dodd-Frank is every bit as far-reaching in its harmful consequences as ObamaCare. Like ObamaCare, with Dodd-Frank we see once again Democrats in Washington dictating the choices individuals can make, commanding the operations of businesses, and harming our ability to compete.

With its creation of new bureaucracies on top of an already balkanized, overly-complex regulatory structure, Dodd-Frank grants an extreme level of power to Washington bureaucrats that is more appropriate for a government controlled economy than one built upon freedom, free enterprise and free markets.

Rather than benefiting American consumers and workers, the law has unintended consequences on every one of its 2,300 pages.

Thanks to the Consumer Financial Protection Bureau’s Qualified Mortgage rule, Dodd-Frank makes it harder for low and moderate-income Americans to buy a home. According to a Federal Reserve study, roughly one third of African-American and Hispanic borrowers would not be able to obtain a mortgage based solely on the CFPB’s debt-to-income requirements.

Because of Dodd-Frank’s crushing regulatory burden, there are fewer community financial institutions serving the needs of small businesses and families. Under Dodd-Frank, the big banks have gotten bigger, the small banks have gotten fewer, and the taxpayer has gotten poorer. Consumers have less access to credit and to financial products and services they want and need.

The new “end user” margin requirements imposed by Dodd-Frank mean Main Street businesses and farmers face higher costs in managing their risk. These costs are passed on to consumers and felt directly by every American family when they sit down at the kitchen table.

Dodd-Frank’s Volcker rule makes U.S. capital markets less competitive against other international financial centers. It’s more expensive for U.S. companies to raise working capital and harder for Americans saving for retirement or their children’s college educations.

Dodd-Frank created the Financial Stability Oversight Council and gave it the power to designate certain large businesses as “Systemically Important Financial Institutions” (SIFIs). Now insurance companies that pose no discernible systemic risk to the economy are being subjected to unnecessary regulation that dries up capital for infrastructure projects, and harms investors and policy-holders.

Rather than ending bailouts, Dodd-Frank entrenches bailouts as official government policy. In the words of Richard Fisher, the President of the Dallas Federal Reserve Bank, “SIFIs occupy a privileged position in the financial system.” They are “viewed by the market as being the first to be saved by the first responders in a financial crisis.”

Thanks to Dodd-Frank’s Durbin amendment, services that bank customers once took for granted like free checking are being curbed or eliminated.

Dodd-Frank is one of the linchpins of an Obama economic strategy that has brought America the slowest, weakest non-recovery recovery since the Great Depression. 

Never before in my lifetime do I remember a time when the challenges of upward mobility and economic opportunity have been greater. Not surprisingly, I also do not ever recall a time when the red tape burdens on our job creators and capital markets have been greater.

Whether it’s Dodd-Frank, ObamaCare or the IRS, the heavy burden of Washington regulations is choking our economy and the ability of employers to hire more workers.

The numbers tell the story: 16 million Americans unemployed or underemployed; the smallest percentage of workers in our labor force in three decades; and small business start-ups at the lowest level in 20 years.

Dodd-Frank and the rest of Washington over-regulation help explain why the U.S. economy today is $1.6 trillion smaller than what an average economic recovery over the last 50 years looks like. This lackluster performance explains why a family of four today is missing more than $1,100 in after-tax income and why there are nearly 6 million fewer jobs compared with the average recovery.

The answer is less Dodd-Frank, less red tape and more free enterprise and economic freedom. 

Free enterprise has lifted more people out of poverty than all the government anti-poverty programs combined. It is the only economic system that frees ordinary people to achieve extraordinary results.

In the Financial Services Committee, we’ve focused on passing initiatives that make it easier to create jobs so more Americans can find work. So far, more than 20 of these jobs bills that have come out of our committee have passed the House with bipartisan support. 

Among them are bipartisan bills to repeal Dodd-Frank regulations that make it harder to invest in small companies; to streamline rules so it’s easier for small business owners to sell their enterprises rather than close them up when they retire; and to require federal agencies to undertake a thorough cost-benefit analysis of proposed rules and choose the lowest cost alternative.

We’re advancing solutions to reduce red tape, help small businesses grow and expand opportunity for everyone. Many of these bipartisan bills relieve Main Street from burdensome Dodd-Frank regulations that we were told would apply only to Wall Street. But like dozens of other House-passed bills, they are stuck in the Senate.

If President Obama is serious about helping low and middle-income Americans, he will use his pen and phone for something other than executive power grabs. He will use them to call on Senate Democrats to get to work and do their part.

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Egregious Ex-Im Bank Deal of the Day

2014/07/22


e·gre·gious -- outstandingly bad; shocking.
 The Ex-Im Bank’s Support for Australia’s “Corporate Welfare Queen”


 
 Australia’s richest citizen Gina Rinehart in Singapore at the signing of agreements for the Roy Hill mine.

 

Why is Australia’s richest citizen – worth at least $18 billion – receiving loans backed by American taxpayers?

The Sydney Morning Herald calls it “the latest example of a flaw in the United States political economy:  what some see as crony capitalism.”

Regrettably, “crony capitalism” is just what the Export-Import Bank does day-in, day-out: use hardworking taxpayers to finance crony deals for the powerful, the wealthy, and the well-connected. 

Here are the deal details:

Australia’s richest citizen, billionaire mining heiress Gina Rinehart, secured a $694 million loan from American taxpayers thanks to Ex-Im’s support for the Roy Hill iron ore project. 

Why are U.S. taxpayers involved? Because – as the newspaper reports – “Commercial banks and bond investors were reluctant to shoulder all the risk.”

If big banks and bond investors won’t take the risk, then why should American taxpayers be forced to?

Could this egregious deal get any worse? Why, yes. 

Not only does Ex-Im risk taxpayers’ hard-earned dollars, Ex-Im’s financing of the deal also puts American jobs at risk.  Four Democratic senators say the project will “substantially injure American iron ore and steel producers and their employees that are competing in the same global marketplace.”

Explains Senator Amy Klobuchar (D-MN):  “My grandfather worked 1,500 feet underground as a miner, and countless other men and women in Northern Minnesota have worked hard providing iron ore to the world.  It doesn’t make sense for our government to be funding our competition, especially when this project could have such a negative impact on local economies and the livelihoods of so many miners.”

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Hearing entitled “Oversight of the SEC’s Division of Corporation Finance”

2014/07/17


Hearing entitled “Assessing the Impact of the Dodd-Frank Act Four Years Later”

2014/07/16


Hearing entitled “A Legislative Proposal Entitled the ‘Bank Account Seizure of Terrorist Assets (BASTA) Act’”

2014/07/10


Hearing entitled “Monetary Policy and the State of the Economy”

2014/07/09


Hearing entitled “Examining Regulatory Relief Proposals for Community Financial Institutions, Part II”

2014/07/08


Hearing entitled “The Department of Justice’s ‘Operation Choke Point’”

2014/07/08


Hearing entitled “Legislation to Reform the Federal Reserve on Its 100-year Anniversary”

2014/07/03


Hearing entitled “Oversight of the SEC's Division of Trading and Markets”

2014/06/20


There is no media available for this committee.

Contact Information

2129 Rayburn HOB
Washington, DC 20515
Phone 202-225-7502
Fax 202-226-0471
financialservices.house.gov


Membership

Michele Bachmann

MINNESOTA's 6th DISTRICT

Spencer Bachus

ALABAMA's 6th DISTRICT

Andy Barr

KENTUCKY's 6th DISTRICT

John Campbell

CALIFORNIA's 45th DISTRICT

Shelley Capito

WEST VIRGINIA's 2nd DISTRICT

Tom Cotton

ARKANSAS' 4th DISTRICT

Sean Duffy

WISCONSIN's 7th DISTRICT

Stephen Fincher

TENNESSEE's 8th DISTRICT

Mike Fitzpatrick

PENNSYLVANIA's 8th DISTRICT

Scott Garrett

NEW JERSEY's 5th DISTRICT

Michael Grimm

NEW YORK's 11th DISTRICT

Jeb Hensarling

TEXAS' 5th DISTRICT

Bill Huizenga

MICHIGAN's 2nd DISTRICT

Randy Hultgren

ILLINOIS' 14th DISTRICT

Robert Hurt

VIRGINIA's 5th DISTRICT

Peter King

NEW YORK's 2nd DISTRICT

Frank Lucas

OKLAHOMA's 3rd DISTRICT

Blaine Luetkemeyer

MISSOURI's 3rd DISTRICT

Kevin McCarthy

CALIFORNIA's 23rd DISTRICT

Patrick McHenry

NORTH CAROLINA's 10th DISTRICT

Gary Miller

CALIFORNIA's 31st DISTRICT

Mick Mulvaney

SOUTH CAROLINA's 5th DISTRICT

Randy Neugebauer

TEXAS' 19th DISTRICT

Steve Pearce

NEW MEXICO's 2nd DISTRICT

Robert Pittenger

NORTH CAROLINA's 9th DISTRICT

Bill Posey

FLORIDA's 8th DISTRICT

Dennis Ross

FLORIDA's 15th DISTRICT

Keith Rothfus

PENNSYLVANIA's 12th DISTRICT

Ed Royce

CALIFORNIA's 39th DISTRICT

Steve Stivers

OHIO's 15th DISTRICT

Marlin Stutzman

INDIANA's 3rd DISTRICT

Ann Wagner

MISSOURI's 2nd DISTRICT

Lynn Westmoreland

GEORGIA's 3rd DISTRICT