Committee on Financial Services

Jeb Hensarling

Hearing entitled “Preserving Retirement Security and Investment Choices for All Americans”

2015/09/03


Committee Schedules Hearings on Terror Financing and Preserving Retirement Security

2015/09/03

Financial Services Committee Chairman Jeb Hensarling (R-TX) today announced the committee’s hearing schedule for the week of September 7.

Wednesday, September 9 at 10:00 A.M. - The Task Force to Investigate Terrorism Financing will hold a hearing entitled “Could America Do More? An Examination of U.S. Efforts to Stop the Financing of Terror.”

Thursday, September 10 at 10:00 A.M. - The Oversight and Investigations Subcommittee and the Capital Markets and Government Sponsored Enterprises Subcommittee will hold a joint hearing on “Preserving Retirement Security and Investment Choices for All Americans.”  The subcommittees will consider the Department of Labor’s (DOL) proposed rule to redefine fiduciary and its consequences for retirement savers, retail investors and the economy.  At the hearing, members will also discuss H.R. 1090, the Retail Investor Protection Act, introduced by Rep. Ann Wagner (R-MO).  H.R. 1090 would require the proposed rule to first be issued by the Securities and Exchange Commission.

“This proposed rule from the Department of Labor is completely unworkable and will shut out millions of low and middle-income investors from the retirement savings advice market.  The Retail Investor Protection Act will put a hold on the DOL rule in order to prevent unintended consequences that make it more difficult for people to save for their retirement,” said Rep. Wagner.

Both hearings will take place in room 2128 of the Rayburn House Office Building and will also be webcast.  Additional information about each hearing, including a list of invited witnesses, will be available online at financialservices.house.gov/.

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Hearing entitled “Could America Do More? An Examination of U.S. Efforts to Stop the Financing of Terror”

2015/09/02


Hensarling Statement on Finalized CEO Pay Ratio Rule

2015/08/05

Financial Services Committee Chairman Jeb Hensarling (R-TX) made the following statement after the Securities and Exchange Commission (SEC) voted today to finalize its CEO pay ratio rule. Last year, Chairman Hensarling along with Capital Markets and Government Sponsored Enterprises Subcommittee Chairman Scott Garrett (R-NJ) and Monetary Policy and Trade Subcommittee Chairman Bill Huizenga (R-MI) wrote a letter to SEC Chair Mary Jo White encouraging her and the Commission not to prioritize the completion of this controversial rule ahead of other much-needed rules, including many within the bipartisan JOBS Act.

“Under the Obama economic strategy of which Dodd-Frank is a central pillar, our anemic recovery has created 12.1 million fewer jobs than the average recovery since World War II. For more than a year now, the share of able-bodied Americans in the labor force has hovered at the lowest level in nearly 40 years. Small business startups are at the lowest level in a generation. This is simply unacceptable.

“That is why today’s 3-2 partisan vote is disappointing because it is the latest example of the SEC squandering its resources on rulemakings that do nothing to help small business startups and will instead harm U.S. companies and investors. The SEC has devoted thousands of man-hours and millions of dollars to finish rules mandated by the Dodd-Frank Act that neither address the causes of the financial crisis nor advance the SEC’s statutory mission.   Chair White prioritized this rulemaking to appease those that want a government regulator-controlled economy.  Instead of focusing on rules that would protect investors or facilitate capital formation for small and medium-sized businesses, Dodd-Frank decided to mandate disclosure rules that burden every U.S. public company that cost the economy billions of dollars without any material benefit.”

“When businesses attempt to comply with this rule, some will seek to make up those costs by reducing their workforce.   I’m guessing that a worker who loses his or her job will take little comfort in knowing the ratio between the CEO’s pay and the salary that they are no longer receiving because Dodd-Frank has put them out of work.”

“This fall, the committee will consider legislation to repeal this provision, H.R. 414.  Congress and the SEC must do more to reform the current regulatory regime which shuts small companies out of the U.S. capital markets. That is why the committee has passed 14 capital formation bills this Congress to help these companies grow and create jobs. These bills and the SEC’s full implementation of the JOBS Act are what will truly help us recover from this failed era of Obamanomics.”

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WEEK IN REVIEW

2015/07/31

Committee Passes Federal Reserve Accountability, Bipartisan Reg Relief Bills

On Wednesday the Financial Services Committee passed several  bills designed to help grow the economy, create jobs and bring much-needed accountability and transparency to the Federal Reserve.

H.R. 3189, the Fed Oversight Reform and Modernization Act (FORM Act), requires the Federal Reserve to transparently communicate its monetary policy decisions to the American people.  Included among its reforms are changes that require the Fed to generate a monetary policy strategy of its own choosing.

“History – not theory, but history – shows that when the Fed follows a monetary policy strategy of its own choosing and transparently communicates that strategy to the rest of us, the economy performs better and more Americans get to wake up in the morning and go to work. The FORM Act protects the Fed’s independence to chart whatever monetary policy course it deems appropriate, but it has to give the American people a greater accounting of its actions," said Chairman Jeb Hensarling (R-TX).

The FORM Act’s sponsor, Monetary Policy and Trade Subcommittee Chairman Bill Huizenga (R-MI), added, "With the Federal Reserve having more power and responsibility than ever before, it is imperative the Fed changes its opaque structure and becomes more transparent and accountable to the American people. The Fed’s recent high degree of discretion and its lack of transparency in how it conducts monetary policy demonstrate that not only are reforms needed, but more importantly that reforms are necessary. We need to modernize the Federal Reserve and bring it into the 21st Century."

For more information on the bills that the committee passed this week, click here.


Dodd-Frank Leaves Americans Less Prosperous

The Committee held its second hearing this month focused on the consequences of the Dodd-Frank Act with a discussion of the sweeping law’s impact on Americans’ prosperity. 

Although President Obama promised Dodd-Frank would “lift the economy” when he signed the 2,300-page bill into law with much pomp and circumstance five years ago, Americans are instead stuck in the worst performing economic recovery since World War II – one that is even “weaker than previously thought, according to newly revised data,” the Wall Street Journal reported this week.  And ABC News reported this week that wage growth fell to a “record-slow pace” in the second quarter.

The Committee’s hearing, according to Investor’s Business Daily, offered “eye-opening testimony” that Dodd-Frank is “largely to blame for our lackluster economy.”

“I believe that all the new regulation added by the Dodd-Frank Act in 2010 is the primary reason for the slow growth this country has experienced since 2010,” testified Peter Wallison of the American Enterprise Institute.

Former Senator Phil Gramm, an economist who served as Chairman of the Senate Banking Committee, testified before the Committee that “the regulatory burden has exploded under Dodd-Frank” and today “we’re experiencing the poorest recovery in the post-war history of America.  If we had simply equaled the average of the 10 previous recoveries in the post-war period, 14.4 million more Americans would be working today and the average income of every man, woman, and child in the country would be over $6,000 higher.”  

Wallison, who served on the Financial Crisis Inquiry Commission, refuted some of the Democrats’ myths about the cause of the financial crisis.

“Now, predatory lending no doubt occurred, but the Financial Crisis Inquiry Commission was unable to find enough data to show that it was significant. What we learned from the financial crisis is that in 2008 more than half of all mortgages in the United States were subprime. And of those, 76 percent were on the books of government agencies -- primarily Fannie Mae and Freddie Mac, FHA too.  The point was here that the government had required certain quotas of mortgages to be made to people below median income.  Now, there was no reason why that was a bad idea except for the fact that if you make those quotas too high then the GSEs had to reduce their underwriting standards, which they did. That's why 81 percent of all of the losses that Fannie suffered they reported as coming from subprime and other low-quality mortgages,” Wallison explained.

MEMBER SPOTLIGHT

Rep. Ed Royce | Bill to kill $3M raises for Fannie, Freddie CEOs gains momentum

“Congress needs to put a stop to the planned multi-million dollar paydays at Fannie Mae and Freddie Mac. Holding compensation packages at taxpayer-backed organizations to responsible limits is in the interest of the public trust,” Royce said in advance of his bill being marked up.

Weekend Must Reads


Investor's Business Daily | How Dodd-Frank Ate The U.S. Economic Recovery

Dodd-Frank has led to a decline in small banks and rising market share for the very largest. A cynic might suspect this was how it was designed to be. But what it's done to the economy is worse.

International Business Times
| Dodd Frank Act Killing US Banks? Only 3 New Financial Institutions Have Opened Since 2010

One explanation for the lack of new banks in recent years might be the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted in 2010. Before the act was passed, the banking industry was spurring, and over 100 new banks popped onto the scene every year, according to data from the Federal Deposit Insurance Corporation, which is responsible for approving new banks.

Wall Street Journal | Dodd-Frank’s Unhappy Birthday

A unanimous three-judge panel of the D.C. Circuit Court of Appeals ruled that State National Bank of Big Spring has standing to challenge the CFPB’s constitutionality. The bank, supported by a legal team including former White House counsel Boyden Gray and the Competitive Enterprise Institute, argues that the agency violates the Constitution’s separation of powers. The bureau is an independent agency and thus largely unaccountable to the President. But because it draws funding directly from the Federal Reserve, rather than appropriations, it is also largely unaccountable to Congress. And it can declare lending practices abusive at its whim. Don’t be surprised if this is another case that makes it to the Supreme Court.

AEIdeas | The Wrong Directions for Poverty Policy

If the best antipoverty program is a job, government should support policies aimed at job growth, and should not increase wages for some while making employment harder to find for others.

    In the News

Wall Street Journal | House Committee Approves Federal Reserve Overhaul Bill

Washington Examiner | Fed Faces a Laundry List of Reform Measures

Wall Street Journal | Lawmakers Move to Halt Fannie, Freddie Pay Raises

Bloomberg | House Panel Approves Bills Meant to Help Small Banks

American Banker | Your Definitive Guide for the Latest Slew of House Banking Votes

Housing Wire | Dodd-Frank dragging down economic recovery, House Committee says

The Hill | House members push Obama to start over on financial adviser rule

Housing Wire | Bill to eliminate $6M raise for Fannie, Freddie CEOs passes House Committee 57-1

Automotive News | U.S. House committee approves limit on CFPB's oversight of auto lending

Bloomberg | Fed Accidentally Released Confidential Staff Projections

National Mortgage News | House Committee Passes Bills to Delay TRID Enforcement, Revise QM

DSNews House | Committee Passes 14 Bills, Including Regulatory Relief and Fed Reform 

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Committee Approves Federal Reserve Oversight and Transparency Reforms

2015/07/29

WASHINGTON -- The House Financial Services Committee approved legislation today designed to improve the economy’s performance by bringing greater accountability and transparency to the Federal Reserve.  The bill, the Fed Oversight Reform and Modernization Act (FORM Act) sponsored by Monetary Policy and Trade Subcommittee Chairman Bill Huizenga (R-MI), passed the Committee 33-25.

“Our economy would be healthier if the Federal Reserve were more predictable in its conduct of monetary policy and more transparent about its decision-making.  Today we’re merely left with so-called ‘forward guidance,’ which unfortunately remains amorphous, opaque and improvisational, and leaves hardworking taxpayers uncertain as they attempt to plan their economic futures,” said Chairman Jeb Hensarling (R-TX).  “History – not theory, but history – shows that when the Fed follows a monetary policy strategy of its own choosing and transparently communicates that strategy to the rest of us, the economy performs better and more Americans get to wake up in the morning and go to work.  The FORM Act protects the Fed’s independence to chart whatever monetary policy course it deems appropriate, but it has to give the American people a greater accounting of its actions.”

Chairman Huizenga said, “With the Federal Reserve having more power and responsibility than ever before, it is imperative the Fed changes its opaque structure and becomes more transparent and accountable to the American people.  The Fed’s recent high degree of discretion and its lack of transparency in how it conducts monetary policy demonstrate that not only are reforms needed, but more importantly that reforms are necessary.  We need to modernize the Federal Reserve and bring it into the 21st Century.”

Among several reforms, the legislation requires the Federal Reserve to transparently communicate its monetary policy decisions to the American people.  The FORM Act requires the Fed to generate a monetary policy strategy of its own choosing in order to provide added transparency about the factors leading to its monetary policy decisions.

By requiring the Fed to regularly communicate how its policy choices compare to a benchmark rule, the FORM Act helps consumers and investors make better decisions in the present and form better expectations about the future. These improvements are important for Americans to enjoy greater economic opportunity. By pursuing this expansion through increased transparency instead of policy mandates, the FORM Act further insulates the Fed from political pressures.

The FORM Act also:

  • Requires the Federal Reserve to conduct cost-benefit analysis when it adopts new rules.
  • Requires transparency about the Federal Reserve’s bank stress tests and about international financial regulatory negotiations conducted by the Federal Reserve, Treasury Department, Office of the Comptroller of the Currency, Securities and Exchange Commission, and Federal Deposit Insurance Corporation.
  • Requires the Federal Reserve to disclose the salaries of highly paid employees, provides for at least two staff positions to advise each member of the Board of Governors, and requires Fed employees to abide by the same ethical requirements as other federal financial regulators.
  • Clarifies the “blackout period” governing when Federal Reserve Governors and employees may publicly speak on certain matters; provides for a more balanced representation of voters on the Federal Open Market Committee (FOMC); and provides additional assurances that the Federal Reserve’s emergency lending powers are used only in emergencies.
  • Requires the full FOMC to decide policy rates on excess balances maintained at a Federal Reserve Bank by a depository institution.
  • Removes restrictions placed on the Government Accountability Office’s ability to audit the Federal Reserve, directs the GAO to conduct an audit of the Federal Reserve within 12 months of enactment and requires the GAO to report to Congress within 90 days of completion of the audit.

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Committee Passes Bipartisan Jobs and Federal Reserve Reform Bills

2015/07/29

The Financial Services Committee today approved several bipartisan bills today designed to help grow the economy, create jobs, and bring much needed accountability and transparency to the Federal Reserve.

“We seek to simplify the rules, reduce complexity and compliance costs. Complicated and costly regulations serve as barriers that too often keep small competitors off the playing field. With regulatory relief, we can level that playing field between big corporations and small businesses and create a healthier economy. We can also help create a healthier economy by bringing greater accountability and transparency to the Federal Reserve,” said Chairman Jeb Hensarling (R-TX).

Below is the full list of bills passed by the committee today:

H.R. 766, the “Financial Institution Customer Protection Act of 2015”
Sponsor: Rep. Blaine Luetkemeyer (R-MO)

H.R. 766 prevents federal banking agencies from abusing executive power when preventing businesses from using depository institutions. This is in direct response to the Obama Administration’s Operation Choke Point, which is coercing banks into cutting off relations with perfectly legal businesses.

H.R. 766 passed 35-19.

H.R. 1210, the “Portfolio Lending and Mortgage Access Act”
Sponsor: Rep. Andy Barr (R-KY)

H.R. 1210 would address the onerous requirements of Section 1411 of the Dodd-Frank Act and codifies the common sense understanding that financial institutions who hold mortgages on portfolio have a vested interest in insuring that their customers repay their mortgages. H.R 2673 would provide regulatory relief for community financial institutions and make it easier for Americans to access affordable mortgage credit and put a stop to “QM” standing for “quitting mortgages.”

H.R. 1210 passed 38-18.

H.R. 1317, To amend the Commodity Exchange Act and the Securities Exchange Act of 1934 to specify how clearing requirements apply to certain affiliate transactions, and for other purposes.
Sponsor: Rep. Gwen Moore (D-WI)

H.R. 1317 provides much needed regulatory relief to commercial businesses inappropriately captured by some of the costly and burdensome requirements of Title VII of the Dodd-Frank Act.

H.R. 1317 passed 58-0.

H.R. 1553, the “Small Bank Exam Cycle Reform Act of 2015”
Sponsor: Rep. Scott Tipton (R-CO)

H.R. 1553 provides regulatory relief for community financial institutions suffering under the regulatory red tape regime of Dodd-Frank by allowing well-managed institutions to qualify for modified exam cycles.

H.R. 1553 passed 58-0.

H.R. 1737, the “Reforming CFPB Indirect Auto Financing Guidance Act”
Sponsor: Rep. Frank Guinta (R-NJ)

H.R. 1737 repeals a misguided bulletin issued by the Consumer Financial Protection Bureau relating to indirect auto lending compliance and the Equal Credit Opportunity Act. The bill also requires the CFPB to follow a more transparent process when issuing subsequent auto finance guidance.  

H.R. 1737 passed 47-10.

H.R. 1839, the “Reforming Access for Investments in Startup Enterprises Act of 2015”
Sponsor: Rep. Patrick McHenry (R-NC)

H.R. 1839 will promote a liquid secondary market for shareholders seeking to sell private securities. It will also encourage startups and private companies to both attract and retain talented employees and raise needed equity capital to grow their businesses.

H.R. 1839 passed 58-0

H.R. 1941, the “Financial Institutions Examination Fairness and Reform Act”
Sponsor: Rep. Lynn Westmoreland (R-GA)

H.R. 1941 provides financial institutions with more ability to appeal or oppose exam findings without incurring retaliation from a regulator.

H.R. 1941 passed 45-13.

H.R. 2091, the “Child Support Assistance Act of 2015”
Sponsor: Rep. Bruce Poliquin (R-ME)

H.R. 2091 streamlines the child support payment process.

H.R. 2091 passed 56-2.

H.R. 2243, the "Equity in Government Compensation Act of 2015"
Sponsor: Rep. Ed Royce (R-CA)

H.R. 2243 would reinstate the salary caps for the CEOs at Fannie Mae and Freddie Mac, which were eliminated by the Director of the Federal Housing Finance Agency.

H.R. 2243 passed 57-1.

H.R. 2643, the “State Licensing Efficiency Act of 2015”
Sponsor: Rep. Roger Williams (R-TX)

H.R. 2643 ensures state regulatory agencies have access to the most up-to-date criminal background information from the FBI for their licensing purposes.

H.R. 2643 passed 57-0. 

H.R. 2912, the “Centennial Monetary Commission Act of 2015”
Sponsor: Rep. Kevin Brady (R-TX)

H.R. 2912 would establish a 14-member Centennial Monetary Commission, charged with studying monetary policy.

H.R. 2912 passed 35-22.

H.R. 3032, the “Securities and Exchange Commission Reporting Modernization Act”
Sponsor: Rep. Kyrsten Sinema (D-AZ)

H.R. 3032 eliminates a reporting requirement for the Securities and Exchange Commission that has already been eliminated for all other federal agencies

H.R. 3032 passed 58-0

H.R. 3189, the “Fed Oversight Reform and Modernization Act of 2015”
Sponsor: Rep. Bill Huizenga (R-MI)

H.R. 3189 would improve the economy’s performance by bringing greater accountability and transparency to the Federal Reserve.

H.R. 3189 passed 33-25.

H.R. 3192, the “Homebuyers Assistance Act”
Sponsor: Rep. French Hill (R-AR)

H.R. 3192 delays enforcement of a CFPB regulation surrounding the home buying process to allow more time for the CFPB to ensure purchasers and buyers are not unfairly harmed by this new regulation.  

H.R. 3192 passed 45-13.

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Continuation of Markup of H.R. 766, H.R. 1210, H.R. 1317, H.R. 1553, H.R. 1737, H.R. 1839, H.R. 1941, H.R. 2091, H.R. 2243, H.R. 2643, H.R. 2912, H.R. 3032, H.R. 3189, and H.R. 3192

2015/07/29


Hensarling: “Hardworking Americans deserve better than Dodd-Frank”

2015/07/28


 
CLICK HERE TO WATCH

 
WASHINGTON- Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today’s full committee hearing to examine America’s economic prosperity in the five years since the Dodd-Frank Act became law. This hearing is the latest in a series focused on the impact Dodd-Frank has had on prosperity, freedom and financial stability:

Under the Obama economic strategy of which Dodd-Frank is a central pillar, our anemic recovery has created 12.1 million fewer jobs than the average recovery since World War II. For more than a year now, the share of able-bodied Americans in the labor force has hovered at the lowest level in nearly 40 years. Small business startups are at the lowest level in a generation. Had this recovery simply been as strong as average previous ones, middle income families would have nearly $12,000 more in annual income, and 1.6 million more of our fellow Americans would have escaped poverty.  This is simply unacceptable.

But more than numbers, my constituents’ angst tells me all I need to know. One wrote me not long ago: “There are part time jobs around my area…but always jobs with no benefits and less than 40 hours…My son is a disabled Iraqi Freedom combat veteran who has lost hope of a decent full time job.” 

I suspect most Members of Congress unfortunately still receive letters like these. The painful truth is that Dodd-Frank and the hyper-regulated Obama economy are failing low- and moderate income Americans who simply want their fair shot at economic opportunity and financial security.

As we know, a recent Federal Reserve report states that within a few years roughly one-third of black and Hispanic borrowers may find themselves disqualified from obtaining a mortgage to buy a home because of Dodd-Frank’s “Qualified Mortgage” rule based solely on its rigid debt-to-income requirements.

Because of Dodd-Frank, free checking at banks has been cut in half. Furthermore, according to the FDIC, more than 9 million households don’t have a checking or savings account, principally because account fees are too high or unpredictable, another consequence of Dodd-Frank.

Dodd-Frank’s 2,300 pages launched a salvo of consequences that have crippled growth. It was advertised to target Wall Street but has instead clearly hit Main Street. It has had pernicious effects on small businesses and community financial institutions which are the lifeblood of the Main Street economy. Community banks and credit unions supply the bulk of small business and agricultural loans, but the combined weight of Dodd-Frank’s 400 regulations is dragging them down.  We are losing on average one community financial institution a day.

But Dodd-Frank goes far beyond banks and credit unions. Its corporate governance provisions hit every public company in America. Grocery markets, cable TV servers, and bowling alley chains did not cause the financial meltdown but still must comply with regulations imposing wage controls, salary ratios, and private compensation disclosures made for big Wall Street firms. Every dollar these businesses are forced to spend on hiring lawyers and accountants to explain this gibberish is taken out of working peoples’ wages and capital expansion.  No wonder the economy limps along at two percent GDP growth, far below its historic norm. No wonder low- and moderate-income Americans lose sleep at night worrying about their stagnant wages, smaller bank accounts, and children’s future.

Hardworking Americans deserve better than Dodd-Frank.

 

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Dodd-Frank Contributes to Weakest Recovery of Modern Era

2015/07/28


 

WASHINGTON- The Financial Services Committee held a full committee hearing today to examine America’s economic prosperity in the five years since the Dodd-Frank Act became law. This hearing was the latest in a series focused on the impact Dodd-Frank has had on prosperity, freedom and financial stability:

When he signed Dodd-Frank into law five years ago this month, President Obama claimed Dodd-Frank would “lift the economy,” but it has done the opposite, making it harder for Americans to fulfill their aspirations and achieve their dreams for themselves and their families. Unfortunately, the law has instead proved to be the financial equivalent of Obamacare, dictating individual choices, creating maddening layers of bureaucracy, harming U.S. competitiveness, and leaving its intended beneficiaries worse – not better – off.

“Under the Obama economic strategy of which Dodd-Frank is a central pillar, our anemic recovery has created 12.1 million fewer jobs than the average recovery since World War II. For more than a year now, the share of able-bodied Americans in the labor force has hovered at the lowest level in nearly 40 years. Small business startups are at the lowest level in a generation. Had this recovery simply been as strong as average previous ones, middle income families would have nearly $12,000 more in annual income, and 1.6 million more of our fellow Americans would have escaped poverty.  This is simply unacceptable,” said Chairman Jeb Hensarling (R-TX).

“The painful truth is that Dodd-Frank and the hyper-regulated Obama economy are failing low- and moderate income Americans who simply want their fair shot at economic opportunity and financial security,” Hensarling added.

Key Takeaways:

•    Thanks to the CFPB’s Qualified Mortgage, it is now harder for low and moderate-income Americans and minorities to buy a home.

•    Thanks to the crushing regulatory burden unleashed by Dodd-Frank’s 400 new federal regulations, there are far fewer community banks serving the needs of small businesses and families in communities across America than before Dodd-Frank was enacted, resulting in fewer financial products and services being offered, and at a higher cost.

•    Thanks to the Dodd-Frank Act’s Volcker rule—the only rule of its kind in the industrialized world—U.S. capital markets are far less liquid and less competitive vis-à-vis other international financial centers than ever before, making it more expensive for U.S. companies to raise working capital and harming Americans saving for retirement or their children’s educations.

Key Witness Quotes:

•    “Most criticism of Dodd-Frank focuses on the massive increase in regulatory burden it has imposed, but the most costly and dangerous effect of Dodd-Frank, ObamaCare and virtually every other legislative and regulatory action of this Administration is the uncertainty and arbitrary power it has created by the destruction of the rule of law.  These policies are shackling economic growth but more importantly, they are imperiling our freedom.”  - Phil Gramm, Senior Adviser, U.S. Policy Metrics and former United States Senator.

•    “I believe that all the new regulation added by the Dodd-Frank Act in 2010 is the primary reason for the slow growth this country has experienced since 2010….new regulations imposed on banks—particularly small banks—has created a bifurcated economy. Large firms in the real economy, which can access the capital markets for financing, have been growing roughly in line with previous recoveries, but smaller firms that rely on banks for financing are growing far more slowly. Since most of the growth in the US economy, and especially in employment, comes from small firms, the economy is underperforming and will continue to underperform until the treatment of banks under Dodd-Frank Act is substantially modified or repealed.” – Peter Wallison, Arthur F. Burns Fellow in Financial Policy Studies, American Enterprise Institute. 

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Dodd-Frank Fifth Anniversary Round-Up

2015/07/27


Dodd-Frank turns 5: What mess

…what Dodd-Frank actually did was to deliver yet another massive government intervention to cover up the lies of past government interventions that directly led to last decade's economic meltdown.

…What an absolute mess. And it's exactly what you get when, instead of protecting the marketplace, government attempts to command it.


Five Years in, Dodd-Frank Hasn't Accomplished Much

The current banking data seem to point to the fact that Dodd-Frank has not cleared up the problems it attempted to address. In fact, one could argue that in many areas, the situation is still somewhat fragile.


‘Celebrate’ Dodd-Frank’s Anniversary By Fixing It

When it works well, bank regulation helps ensure the safety and soundness of the overall banking system.  But when it doesn’t  -- as with significant parts of Dodd-Frank – it constricts our economy, consumers and small business lending and job growth.


 
Dodd-Frank at 5 -- helping big banks get bigger

…all this government-mandated busywork has helped the industry's largest players, the too-big-to-fail banks that caused many of the problems, run roughshod over their smaller competitors.


 
Local banks feeling weight of Dodd-Frank

Banks across the country, including those doing business in northeast Indiana, are still struggling to absorb costs of complying with the 398 new rules spelled out over thousands of single-spaced pages.


 
5 Numbers To Know As Dodd-Frank Wall Street Reform Celebrates Its 5th Birthday

The five biggest banks control 44 percent of all U.S. banking assets — more than before Dodd-Frank was enacted…That creates the preconditions for a catastrophe…


It's been 5 years since Wall Street got hit with Dodd-Frank and not much has changed

…even the most favorably inclined observer would have to acknowledge that Dodd-Frank hasn’t done a terribly impressive job.

Dodd-Frank didn’t even touch the major proximate source of the crisis: housing finance.
 

 
Dodd-Frank at Five Years, No Victory Laps Please

The regulatory system that emerged from Dodd-Frank, moreover, remains highly balkanized, a regret Mr. Frank acknowledged in his interview with the WSJ. The law created new institutions, such as the Financial Stability Oversight Council and the Consumer Financial Protection Bureau, without consolidating old ones like the Securities and Exchange Commission and Commodity Futures Trading Commission.

This thickening soup of regulatory agencies is one reason why so many Dodd-Frank rules are taking so long to get written.


 
Dodd-Frank at 5 Years Old:  Making The Next Crash More Likely and Worse When It Happens

That’s just fantasy land. You don’t reduce risk by concentrating it. What you’ve done there is concentrate risk, as the word suggests. And that doesn’t reduce risk in the slightest. If it did then we’d never be talking about risk pools for insurance, would we?


 
Five years later, Dodd-Frank still falls short

This "too-big-to-fail" status allows the banks to borrow more cheaply than their inadequate capital cushions would otherwise allow -- an implicit subsidy that benefits their executives and shareholders. Judging from recent research by economists at the New York Federal Reserve, the subsidy has so far survived Dodd- Frank's efforts to eradicate it.


 
Financial reform at 5: Some gains,
big disappointments

Half a decade later, the big banks are even bigger, former U.S. Rep. Barney Frank (a co-crafter of the financial reform bill) sits on a bank board, and former Attorney General Eric Holder now represents the same big banks he couldn’t prosecute because he said that they had “become too large.”

…its potential to prevent another financial calamity for the millions of workers who live paycheck to paycheck remains largely unfulfilled.


 
Five years after Dodd-Frank, time for a course correction at CFPB

…Dodd-Frank has ended up contributing to an unprecedented interference in the free market and reductions in personal privacy and consumer freedom - more than any other single piece of legislation.

The law’s most significant achievement – the creation of the Consumer Financial Protection Bureau (CFPB) – has become the poster child for nanny state government, domestic spying and a lack of transparency and accountability that’s nothing to celebrate.


 
Birthday wish for CFPB: Get real

The agency's original mission was to make the auto finance business more consumer-friendly. But understanding how it measures things, and the menu of options it considers, I'd argue it's done the opposite.


 
Dodd-Frank Just Entered Kindergarten

Dodd-Frank has also been blamed for hurting community banks, which are important to small businesses and economic growth, the drivers of job creation. These smaller banks are typically the only financial institutions in an estimated 1,200 U.S. counties. Even though they had nothing to do with the financial crisis, they got caught up in the rush to regulate, in the “one size fits all” answer the government came up with.


 
Dodd-Frank’s impact on access to credit

Well, before 2009, our local financial marketplace was served by companies like Wachovia Bank, Carolina First Bank, Liberty Savings Bank, RBC/Centura Bank, BankMeridian, Harbourside Community Bank, Beach First Bank, Woodlands Bank and First Federal Bank. All those names have disappeared, to be replaced by Wells Fargo, TD Bank, South State, PNC Bank, Ameris Bank, BNC Bank and, who can forget, Bank of the Ozarks. The score: nine banks gone and seven new names on the front door. We replaced seven “community banks” with at least four “new” banks, each with assets in excess of $10 billion — hardly “community banks.”

This suggests that the biggest American banks are getting bigger while community banks, hardly bad actors in the financial crisis, are bearing much of the pain.


 
Happy 5th birthday Dodd-Frank Act The law has done more harm than good for consumers

These potential borrowers aren’t being denied mortgage loans because they can’t afford them; rather, the community banks that would normally offer them a loan simply aren’t in the business of lending anymore.


 
Time to revisit Dodd-Frank law

…this remains the weakest economic recovery since World War II.

From our free-market perspective, Dodd-Frank went way too far, in particular by imposing heavy new bureaucratic structures, such as the Consumer Financial Protection Bureau, that raised business costs. Local banking officials have told us federal financial filings, in some case, have become five times as voluminous.

 
 
Five years after Dodd-Frank, community
banks need relief

Here in Illinois, we have seen and heard it all. Community banks are finding it harder to keep their doors open to serve their communities. The Illinois Bankers Association has hosted numerous trips for its member banks to go to Washington, D.C., to have frank discussions with lawmakers and provide real-world examples of increased regulatory burden and its effects.

…A new regulation or a bill in Congress may not come with an actual price tag, but banks have to hire new staff and outside contractors to help them navigate a world with so many new regulatory landmines. Those costs function as a hidden federal tax on bank customers.


 
Fix the Dodd-Frank law

Here in Florida, we have seen banks cut lending positions and customer service staff in order to hire compliance officers. We have also seen consolidations in the banking industry because efficient compliance requires economies of scale and it is becoming more and more difficult to operate as a smaller institution. Furthermore, we have had no new banks opening in part because of the restrictive operating environment.


 
Dodd-Frank is hurting consumers and the economy; it needs a complete overhaul

What happens when Main Street businesses can’t get commercial loans or lines of credit or no longer have access to a market for corporate bonds?

It becomes harder to buy equipment, purchase seasonal inventory, manage payroll or even keep the lights on.

Consumers are also impacted. Without access to a variety of financial tools, Americans wouldn’t have the opportunity to get ahead—to go to school, own a home or buy a car to get to work—and, in turn, power our economy.

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Markup of H.R. 766, Financial Institution Customer Protection Act of 2015; H.R. 1210, Portfolio Lending and Mortgage Access Act; H.R. 1317, To amend the Commodity Exchange Act and the Securities Exchange Act of 1934...; H.R. 1553, Small Bank Exam Cycle Reform Act of 2015; H.R. 1737, Reforming CFPB Indirect Auto Financing Guidance Act; H.R. 1839, Reforming Access for Investments in Startup Enterprises Act of 2015; H.R. 1941, Financial Institutions Examination Fairness and Reform Act; H.R. 2091, Child Support Assistance Act of 2015; H.R. 2243, Equity in Government Compensation Act of 2015; H.R. 2643, State Licensing Efficiency Act of 2015; H.R. 2912, Centennial Monetary Commission Act of 2015; H.R. 3032, Securities and Exchange Commission Reporting Modernization Act; H.R. 3189, Fed Oversight Reform and Modernization Act of 2015; and H.R. 3192, Homebuyers Assistance Act

2015/07/24


ICYMI: “Raising Ex-Im From the Dead”

2015/07/24


 
CLICK HERE TO READ THE FULL EDITORIAL


Perhaps you haven’t heard that the charter for the Export-Import Bank ended on June 30. That’s right, a New Deal-era program has expired, and almost no one noticed. Pity, then, that some Republicans are working to resurrect this unnecessary subsidy for business…
 
Opponents have the better arguments on policy and politics. Ex-Im sells taxpayer-backed loans, guarantees and insurance to the customers of U.S. companies to promote exports. The claim is that it fills what Ex-Im calls “gaps” in export financing that commercial lenders are “unable or unwilling to provide.”

But Ex-Im has been subsidizing credit for so long that it’s impossible to know if those “gaps” would be filled if Ex-Im went away. Everything we know about markets says they largely would. Boeing,Ex-Im’s biggest beneficiary, has already said it can secure alternative financing. General Electric doesn’t lack for bankers. The Government Accountability Office (GAO) looked at Ex-Im in 2013 and said the bank “cannot answer the question of what would have happened without Ex-Im financing.” Maybe that’s because it didn’t want to.

As always with politicized credit, Congress has imposed mandates on the bank that should offend GOP principles. There are quotas for businesses owned by women and minorities, as well as for sub-Saharan African companies. The bank adopted guidelines in December 2013 to limit lending to coal and support “President Obama’s goal of reducing carbon pollution.” This might explain whyElizabeth Warren is a big Ex-Im fan, but it’s a wonder why Republicans would want to finance her priorities.

Ex-Im’s supporters say the bank is profitable and has a minuscule default rate, ignoring that Ex-Im uses government accounting. Ex-Im estimates that its six largest credit programs will yield a $14 billion surplus from 2015-2024. But the Congressional Budget Office projects that if Ex-Im used fair-value accounting as private companies do, those six programs would cost taxpayers $2 billion.

Ex-Im’s financial exposure ballooned to $112 billion in 2014, up from $75.2 billion in 2010. The Heritage Foundation’s Diane Katz has documented a litany of bad bets and fraud, including a $3 billion deal in Papua New Guinea that lost track of $577 million. Ex-Im’s Inspector General found in May that the bank’s “risk assessment for FY 2014 reporting provided limited insight into the actual risk of significant improper payments.”

Ex-Im’s cheerleaders say that’s no big deal and, besides, the bank claims its guarantees support “good-paying, export-backed American jobs”— “approximately 164,000” in 2014. That’s a remarkably specific jobs estimate considering that the bank can’t even keep track of its lending. Maybe too specific. GAO has found that Ex-Im can’t distinguish “between jobs that were newly created and those that were maintained,” and that the data “are a decade old,” among other flaws.

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WEEK IN REVIEW

2015/07/24

Committee Explores Appropriate Level of Capital and Liquidity

The full committee held a hearing to delve in to the issue of "too big to fail" and to hear from experts on the appropriate levels of capital and liquidity for U.S. banks to function properly and help foster economic growth.

"Since the crisis, U.S. banks have raised more than $400 billion in new capital and regulators have required institutions to maintain higher capital buffers -- again, under the authority they possessed pre-Dodd-FrankI for one believe that generally this to be a good thing. But the capital standards that were already complex have become even more complex with Basel III. I do not necessarily believe this to be a good thing," remarked Chairman Jeb Hensarling (R-TX) in his opening statement.

He continued, "There are a number of questions this committee must explore. One, again, although capital and liquidity standards have increased post-crisis, do we really know by how much? How opaque do balance sheets still appear? How many items that were once off balance sheet will find their way back onto balance sheets? What amount of capital is the proper amount? Too much, economic growth can stall. Too little and too many failures could yet ensue."

Rep. Sean Duffy (R-WI) noted lawmakers' acknowledgement of Dodd-Frank's clear failure to end "too big to fail." "It's fascinating listening to my friends across the aisle as they've grown over the last four and a half years. They started off telling us how Dodd-Frank was going to end 'too big to fail,' it was a sure fix to end 'too big to fail,' if you listen to the debates with former Chairman Frank. That was the reason why we have a 2,000-plus page bill, why we have 400 new rules. But the tone has changed. They're now admitting that Dodd-Frank in all of its sweeping reforms does not end 'too big to fail.'"


Subcommittee Reviews Proposals for Greater Accountability and Transparency at the Federal Reserve

On Wednesday the Monetary Policy and Trade Subcommittee held a hearing to review legislative proposals that would reform the Federal Reserve. These reforms would bring about a more transparent and accountable Federal Reserve in regard to its operations and decision-making in monetary policy.

"Last Congress, as we examined the Fed’s actions over the last 100 years through the Federal Reserve Centennial Oversight Project, it became clear that the Federal Reserve has gone above and beyond its original mission statement. In fact, since the enactment of Dodd-Frank, the Federal Reserve has gained unprecedented power, influence, and control over the financial system while remaining shrouded in mystery to the American people," said Subcommittee Chairman Bill Huizenga (R-MI). "The Fed must be accountable to the people’s representatives as well as to the hardworking taxpayers themselves."

Rep. Luke Messer (R-IN) spoke about the many Americans who are still suffering from the financial crisis and deserve to have an accountable and transparent Federal Reserve. "I think the American people look at all of what happened, and they understand. They don't know all the complexities but from their perspective, it looks something like this - there are a whole lot of rich people who are part of creating this crisis. The crisis happened and all those rich people are still rich, and the average working family is struggling. Their savings haven't improved. Their wages are flat, and they see a process that seems not very transparent, and they want to know who's accountable and responsible for it."


Task Force Considers Iran Nuclear Deal’s Implications on Financing Terrorists

The Task Force to Investigate Terrorism Financing held a hearing on Tuesday to examine the possible consequences of the Obama administration’s nuclear deal with Iran, part of which involves the lessening or removing of economic sanctions placed on Iran in the past.

“It appears this agreement fails to address the realities surrounding Iran’s sponsorship of terror, while further empowering its mullahs by infusing billions of dollars into its economy through lifting the sanctions that successfully brought Iran to the negotiating table in the first place,” said Task Force Chairman Mike Fitzpatrick (R-PA). “The Iranian regime has demonstrated a lack of concern about its own people, leaving little doubt the estimated $150 billion in funds currently held abroad will allow the Iranian economy to fully recover – not to the benefit of its oppressed citizens – but to the advantage of the next generation of terror syndicates.”

Rep. Ann Wagner (R-MO) also weighed in with her concerns about how the economic boost for Iran might lead to undesirable outcomes for the United States and its allies in the region. “The president has agreed to far-reaching concessions in nearly every area that was supposed to prevent Iran from acquiring a nuclear weapon. Under this deal, Iran would receive $100 billion to $150 billion in sanctions relief and regain access to conventional arms and ballistic missiles that has been denied for nearly a decade. Iran will be free to transfer these weapons, as has been stated, to Hezbollah, the Syrian government, Yemeni rebels, and other terrorist groups. These organizations threaten the security of the United States, our ally Israel, and the world, and will further destabilize a region already in crisis.”


Subcommittee Conducts Oversight of the National Credit Union Administration

The Financial Institutions and Consumer Credit Subcommittee held a hearing to examine the National Credit Union Administration's (NCUA) operations and budget. Credit unions have been shutting down in alarming numbers and unable to fully serve their customers' needs due to overwhelming federal regulations. In lights of these circumstances, Subcommittee Members questioned NCUA Chair Debbie Matz on how the agency allocates its budget and how their policies affect the fiscal health of credit unions.

“Credit unions in particular share a unique relationship with local communities. After all, they are cooperatives at their core. They help bring unserved and underserved customers into the financial mainstream. They provide that first credit card for young adults trying to build credit. They help the first-time homebuyer purchase the home they have been dreaming of," said Subcommittee Chairman Randy Neugebauer (R-TX) in his opening statement. “Unfortunately, credit unions, like community banks, are suffering from ‘one size fits all’ regulatory actions from federal regulators. For example, some credit unions now under go stress testing like their larger bank counterparts. Because of this increased regulatory burden and the related compliance costs, we have seen massive consolidation of credit unions and inflexible product standardization, which has limited consumer choice."

MEMBER SPOTLIGHT

Rep. Scott Tipton | Examining Dodd-Frank’s first five years
 
The regulatory burden under Dodd-Frank Act has imposed 61 million paperwork burden hours — at $24 billion in compliance costs — according to one calculation, with the hardest hit being small financial firms. During a visit to First Colorado National Bank, a locally-owned bank with a $50 million dollar portfolio in Delta, I heard first-hand how much of a toll this law has taken on banks that are the lifeblood of small communities’ economies. Instead of hiring tellers and loan officers, these banks are hiring compliance staff in order to keep up with new regulations. It is disappointing to hear that small bankers no longer feel like they run their bank, but that the federal government runs their bank for them.

To read other comments Committee Members issued this week on the harm caused by the Dodd-Frank Act, click here.

Weekend Must Reads


Wall Street Journal | Dodd-Frank’s Nasty Double Whammy

To limit abuse by the rulers, ancient Rome wrote down the law and permitted citizens to read it. Under Dodd-Frank, regulatory authority is now so broad and so vague that this practice is no longer followed in America. The rules are now whatever regulators say they are.

The Hill | Five years after Dodd-Frank, time for a course correction at CFPB

Most Americans don’t know about the existence of the CFPB, but Dodd-Frank’s out of control law enforcement agency is turning out to be perhaps the most powerful agency nobody has ever heard of. According to a USCC-Zogby Analytics poll in June, 2015, less than one in five Americans know the CFPB exists. From all indications, the CFPB would like to keep it that way.

Forbes | Dodd-Frank At 5 Years Old: Making The Next Crash More Likely And Worse When It Happens
 

You don’t reduce risk by concentrating it. What you’ve done there is concentrate risk.

    On the Horizon 

July 28, 2015 10:00 a.m.
Full Committee Hearing

"The Dodd-Frank Act Five Years Later: Are We More Prosperous?"

July 28, 2015 2:00 p.m.
Full Committee Markup

"Markup of H.R. 766, H.R. 1210, H.R. 1317, H.R. 1553, H.R. 1737, H.R. 1839, H.R. 1941, H.R. 2091, H.R. 2243, H.R. 2643, H.R. 2912, H.R. 3032, H.R. 3189, and H.R. 3192"

  In the News

The Hill | Hensarling: No more birthdays for Dodd-Frank

Pittsburgh Tribune | Dodd-Frank Turns 5: What a Mess

Chicago Tribune | Five Years Later, Dodd-Frank Still Falls Short

Miami Herald | Fix the Dodd-Frank Law

The Hill | Hensarling: Dodd-Frank made country 'less financially stable'

Wall Street Journal | House Republican’s Proposal Takes Aim at Fed Powers

American Banker | House Panel Debates Bills to Rein In Fed's Authority

Bucks County Courier Times | Fitzpatrick Referees Hearing on Iran Nuclear Deal

Northwest Arkansas Democrat Gazette | Hill wants details on money flow to Iran

Credit Union Times | Credit Unions Don’t Represent Their Members: Matz

Wall Street Journal | Raising Ex-Im From the Dead

Politico | Democrats’ New Cause: Dodd-Frank

Washington Examiner | Dodd-Frank at 5: Helping Big Banks Get Bigger

LA Times | Key Regulatory Job Created at Federal Reserve Still Vacant After Five Years

Orange County Register | Time to revisit Dodd-Frank banking restrictions

Read More

Hearing entitled “The Dodd-Frank Act Five Years Later: Are We More Prosperous?”

2015/07/22


Hearing entitled “National Credit Union Administration Operations and Budget”

2015/07/17


Hearing entitled “Ending ‘Too Big to Fail’: What is the Proper Role of Capital and Liquidity?”

2015/07/16


Hearing entitled “The Iran Nuclear Deal and its Impact on Terrorism Financing”

2015/07/15


Hearing entitled “Examining Federal Reserve Reform Proposals”

2015/07/15


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

2015/07/08


Contact Information

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


Membership

Andy Barr

KENTUCKY's 6th DISTRICT

Robert Dold

ILLINOIS' 10th 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

Frank Guinta

NEW HAMPSHIRE's 1st DISTRICT

Jeb Hensarling

TEXAS' 5th DISTRICT

French Hill

ARKANSAS' 2nd 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

Mia Love

UTAH's 4th DISTRICT

Frank Lucas

OKLAHOMA's 3rd DISTRICT

Blaine Luetkemeyer

MISSOURI's 3rd DISTRICT

Patrick McHenry

NORTH CAROLINA's 10th DISTRICT

Luke Messer

INDIANA's 6th 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

Bruce Poliquin

MAINE's 2nd 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

David Schweikert

ARIZONA's 6th DISTRICT

Steve Stivers

OHIO's 15th DISTRICT

Marlin Stutzman

INDIANA's 3rd DISTRICT

Scott Tipton

COLORADO's 3rd DISTRICT

Ann Wagner

MISSOURI's 2nd DISTRICT

Lynn Westmoreland

GEORGIA's 3rd DISTRICT

Roger Williams

TEXAS' 25th DISTRICT

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