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 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
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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:
“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. 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.Read More
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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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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"
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|CLICK HERE TO READ THE FULL EDITORIAL|
Iran is identified by the United States as a state sponsor of terror. Through its terrorist proxies such as Hezbollah, Hamas, and the Houthis, Iran continues to kill innocents around the around. The nuclear agreement will grant Iran over $100 billion in funds, which it will undoubtedly use to fund these terror groups – a development even acknowledged by the Administration.
“Most concerning to myself and many members of the bipartisan task force is the easing of Congressional sanctions – and with it the danger of a new influx of cash finding its way to terrorist organizations threatening strikes to the United States. 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 Michael Fitzpatrick (R-PA).
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