Committee on Financial Services

Jeb Hensarling

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, 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

2015/07/24


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

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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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Committee Schedule for the Week of July 27

2015/07/24

Financial Services Committee Chairman Jeb Hensarling (R-TX) today announced the committee’s hearing schedule for the week of July 27.

Tuesday, July 28 at 10:00 A.M. - This month marks the fifth anniversary of the Dodd-Frank Act being signed into law, and the committee continues its examination of the impact Dodd-Frank is having on our financial stability and economy. On Tuesday the committee will hold a hearing entitled “The Dodd-Frank Act Five Years Later: Are We More Prosperous?”

Invited Witnesses:
  • The Honorable Phil Gramm, Senior Partner, U.S. Policy Metrics and former United States Senator
  • The Honorable R. Bradley Miller, Of Counsel, Grais & Ellsworth LLP and former member of Congress
  • Mr. Peter J. Wallison, Arthur F. Burns Fellow in Financial Policy Studies, American Enterprise Institute
Tuesday, July 28 at 2:00 P.M. - The committee will begin a markup of 14 bills, including the Fed Oversight Reform and Modernization (FORM) Act.

All committee activity will take place in room 2128 of the Rayburn House Office Building. Read More

Media Buzz: Committee Members Evaluate Dodd-Frank's Impact On Its Fifth Anniversary

2015/07/23

This month marks the fifth anniversary of the passage of the Dodd-Frank Act. This law was hastily enacted as a reaction to the financial crisis and is filled with unintended consequences and misguided policies. While Dodd-Frank supposedly targeted Wall Street, it is Main Street that has felt the brunt of its costly and overwhelming regulations.

Republican Members of the Financial Services Committee have heard from people in their districts about how the law has harmed those who did not bring about the financial crisis, yet have been wrongfully penalized. The Committee continues to work on and pass bipartisan legislation to fix, amend and repeal portions of the law that are hurting Main Street and leading to stagnant economic and job growth.

Rep. Ed Royce (R-CA): Dodd-Frank Ignored Root Cause of Financial Crisis

“Aside from enshrining too-big-to-fail, the Dodd-Frank Act ignored the root of the financial crisis by failing to address the duopoly of Fannie Mae and Freddie Mac. Five years later, the government dominates an unstable secondary mortgage market with taxpayers at risk of being tapped for a bailout should we see another downturn. The legacy of Dodd-Frank should be judged not just by what was included in it, but also what was left out of it. Policymakers owe it to the American people to wind down the GSEs before recent history repeats itself."

Reps. Randy Neugebauer (R-TX) and Roger Williams (R-TX): Reform the CFPB to Better Protect Consumers

"Our home state of Texas alone has 115 fewer community banks since the implementation of Dodd-Frank. Considering that 51% of all business loans under $1 millionnationwide are issued by local banks and credit unions, according to the Independent Community Bankers of America, the effects of this sweeping overhaul have trickled down to local job creators who had nothing to do with the financial crisis."

Rep. Bruce Poliquin (R-ME): The Dodd-Frank Act Is Hurting Maine Businesses

"Our community banks and credit unions are the backbone of our economy. They want to be able to lend money to Mainers who are interested in purchasing a new truck or putting a new engine on a lobster boat but they are unable to because of Dodd-Frank’s net of regulations."

Rep. Dennis Ross (R-FL) : Dodd-Frank:‭ ‬Another Empty Promise

"There are now fewer local banks and credit unions serving the needs of small-businesses and families in our communities than before Dodd-Frank was signed into law.‭ ‬These‭ ‬community banks and credit unions did not cause the financial crisis,‭ ‬but they are suffering under‭ ‬the weight of Dodd-Frank’s compliance costs,‭ ‬which are eventually paid by consumers."

Rep. Tom Emmer (R-MN): Five years of Dodd-Frank, Five years of Failure

"I wish I could say this is an isolated occurrence, but a recent study shows that Dodd-Frank has added 61 million hours of paperwork and more than $24 billion in final rule costs for the financial industry in this country. Nationwide, we have lost approximately 1,500 community banks already. The five years since Dodd-Frank was signed into law have been marked with five years of failure."

Rep. French Hill (R-AR): Five Years of Dodd-Frank: Are We Better Off?
 

“Hardworking people throughout Arkansas and the rest of the country were sold a bill of goods on Dodd-Frank, and instead of addressing the true cause of the crisis—misguided housing policy— the law has only increased burdensome regulation and restricted Main Street’s access to much-needed credit and capital."

Rep. Robert Hurt (R-VA): A failing law: Dodd-Frank leaves taxpayers, consumers in the cold
 

"Likewise, in the aftermath of Dodd-Frank, the American consumer is now faced with fewer choices, higher costs and more paperwork when seeking to get a loan or purchase other financial products. The effects on the American consumer are felt as a consequence of the fact that this massive new regulatory structure has resulted in significant consolidation in the marketplace — leaving only the larger institutions and leaving fewer institutions in the marketplace to compete for the business of the American consumer."

Rep. Patrick McHenry (R-NC): 5 years on, consumers still paying price for Dodd-Frank
 

"These overwhelming compliance costs pose a challenge to any bank, but they are especially punishing to the community banks and credit unions that serve my constituents in rural Western North Carolina. Many of these banks have not survived this regulatory onslaught. Since June 2012, nearly 20 percent of N.C. banks have been forced to close or merge with other institutions because of Dodd-Frank."

Rep. Scott Garrett (R-NJ): Garrett Statement on Fifth Anniversary of Dodd-Frank
 

“Five years ago today, the Dodd-Frank Act was signed into law amidst promises that the legislation would protect American consumers, make our economy more competitive, and end ‘too big to fail.’ Instead, Dodd-Frank has stifled economic growth, made it more difficult for Main Street businesses to obtain credit, and increased the likelihood that taxpayers will be on the hook for additional Wall Street bailouts. Most importantly, this law has and has made it harder for Americans to find a job, buy a home, and save money for their family’s future."

Rep. Lynn Westmoreland (R-GA): Five Year Anniversary of Dodd-Frank
 

"Although it was created with the intention of focusing on federal banking, community banks have been hit the hardest. On average, the country is losing at least one community bank or credit union a day. In order to repair the damage from the 2008 crisis, Georgia’s community banks need less government interference and opportunities to grow– however, Dodd-Frank has done nothing but crush those opportunities."
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Hensarling on Capital Standards: Is There A Better Way?

2015/07/23

 
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WASHINGTON- Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today’s full committee hearing to examine capital standards. This hearing is the latest in a series focused on the impact the Dodd-Frank Act has had in the five years since it was signed into law:

I woke up the day before yesterday to an article in one of the Hill publications, Politico I think it was. It was dealing with Dodd-Frank since we have either celebrated or bemoaned the fifth anniversary of Dodd-Frank. The subtitle to the article was, “Suddenly Democrats are resisting any changes to the five year old financial regulation law.” The article goes on to say that a number of moderate Democrats are quite frustrated with that their leadership is preventing them from engaging in meaningful, bipartisan work on the issue.

I do not know the article to be accurate; it certainly feels like it from this position, from this chair. I just want to again say publicly what I have said privately to my friends on the other side of the aisle: the majority stands ready to work with you to clarify, to improve, to deal with any unintended consequences of the law. Both Mr. Dodd and Mr. Frank have previously indicated areas of the law they would work on to improve. I trust they continue to be Democrats in good standing. I would hope you could be a Democrat in good standing and work with the majority. I hope there is not a knee-jerk ideological reaction to anything that deals with Dodd-Frank.  Again, it certainly feels that way.

I guess to some extent there is good news because the topic of today, capital and liquidity, is barely mentioned in Dodd-Frank. There is a differentiation where Dodd-Frank empowers the regulators who already had  pre-Dodd-Frank to set prudent capital and liquidity standards. They provide for a differential for SIFIs but outside of that they are largely silent on the issue.

Regardless of what you believe to be the genesis of the financial crisis, I think we can all agree looking through the rearview mirror that clearly capital and liquidity standards were insufficient, to put it mildly.

Prior to the crisis, there were very complex risk-based capital standards in place, and in implementing these very complex risk-based capital standards, as we know, they were principally designed by the Basel Committee out of Switzerland. Regulators in both the U.S. and in Europe were essentially encouraged to crowd into both mortgage-backed securities and in sovereign debt. Think Fannie, Freddie, and Greek bonds. Thus, rather than mitigating financial instability as the capital standards were intended to do, it appears that Basel helped fuel the financial instability. Rather than containing risk, Basel helped concentrate it.

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-Frank, I 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.

Again, relying on regulators to calibrate risk and predict future economic conditions according to highly complex models -- models that neither market participants nor regulators themselves fully understand -- clearly appears to be a recipe for financial crisis. We have seen the danger of one global view of risk.

So 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.

So at today’s hearing, we will explore is there a better way?  For example, are we better off by measuring capital adequacy according to a more straightforward leverage ratio, which takes discretion away from the regulators and seeks to give greater weight to market forces in allocating resources and achieving financial stability?  Are there specific forms of capital – such as those that convert debt to equity in the event of pre-determined market triggers – could they promote greater market discipline and better risk management at large, complex financial institutions?  

To help us with these questions, we have assembled a panel of noted experts and I certainly look forward to hearing their testimony.

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Task Force Examines Implications of Iran Nuclear Deal

2015/07/23

The Financial Services Committee Task Force to Investigate Terrorism Financing held a hearing yesterday to examine the recent nuclear agreement negotiated by the Obama Administration and the P5+1 nations with Iran and its impact on terrorism financing through and by Iran.

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).

Key Takeaways

  • The Administration has acknowledged the agreement will fund Iran’s terrorist proxies.  Recently, National Security Advisor Susan Rice said “we should expect” that some money Iran would receive from the nuclear deal “would go to the Iranian military and could potentially be used for the kinds of bad behavior that we have seen in the region.”
  • The agreement’s inspection regime is inherently flawed as its 24-day adjudicated timeline reduces detection probabilities where the system is weakest: detecting undeclared facilities and materials.
  • The agreement would ease sanctions on Iran to allowing it to regain access to the international banking system known as the SWIFT network (Society for Worldwide Interbank Financial Telecommunications).  The SWIFT network is the electronic bloodstream of the global financial system allowing more than 10,800 financial companies worldwide to communicate.  Even with snapback sanctions, it will be difficult for the United States and the EU to re-impose SWIFT sanctions.

Topline Witness Quotes

  • “Today, the Islamic Republic still ranks as the world’s foremost  sponsor  of  international  terrorism—a  designation  that  its  leaders  wear proudly in the name of “resistance” against the “Great Satan” (the United States) and the  West  more  broadly.”

    “As of 2007, then-Under Secretary of the Treasury for Terrorism and Financial Intelligence Stuart Levey estimated publicly that Tehran “has a nine-digit line item in its budget for support to terrorist organizations.”

    “The  challenge  that  this  poses  to  the  United  States  and  its  allies  is  clear.  As scholars Scott Modell and David Asher have noted, despite years of economic and political pressure, “Iran seems undeterred in its mission to confront the ‘enemies of Islam’ and create new centers of non-Western power around the world.”24 The resources at Iran’s disposal to do so are now poised to expand exponentially as a result of the sanctions relief it has successfully negotiated with the P5+1.” –
    Ilan Berman, Vice President, American Foreign Policy Council
  • “Iran’s continued support for global terrorism requires that U.S. terrorism sanctions be maintained and expanded. Iran’s human rights record has, by numerous expert accounts, deteriorated under President Hassan Rouhani. Congress should work with the Obama administration to enhance terrorism sanctions, particularly focused on the IRGC and Quds Force and its various officials, entities, and instrumentalities. Congress should work with the Obama administration to significantly expand U.S. human rights sanctions against any and all Iranian officials, entities, and instrumentalities engaged in human rights abuses. The penalties for both of these sanctions should go beyond travel bans and asset freezes and target the sectors, entities, and instrumentalities that provide revenues to fund Iranian terrorism activities and/or human rights abuses.” – Mark Dubowitz, Executive Director, Center on Sanctions and Illicit Finance, Foundation for Defense of Democracies
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Subcommittee Examines the National Credit Union Administration's Operations and Budget

2015/07/23

The Financial Services Financial Institutions and Consumer Credit Subcommittee held a hearing today to conduct much-needed oversight of the National Credit Union Administration’s (NCUA) operations and budget.

Unlike many other federal agencies, NCUA operates independent of the congressional appropriations process as their operating budget is fulfilled predominately by assessments of the federal credit unions they oversee. In each year since 2008, the NCUA budget has increased but, at the same time, the number of credit unions has dropped by nearly a quarter.  

“Today’s hearing will mark the first time since 2011 that the NCUA Chair has testified before Congress. As with any federal agency, it is imperative that we conduct vigorous oversight of budgeting and operations. This ensures that the money paid into the system by credit unions is being spent appropriately, and that the taxpayers remain protected by a strong Share Insurance Fund. Further, it ensures rigorous debate of policy decisions made by the NCUA,” said Subcommittee Chairman Randy Neugebauer (R-TX).

“I am hopeful Chair Matz will address two issues in particular. First, the NCUA’s budget has increased each year since 2008, sometimes by double-digit percentages. However, during the same timeframe, the number of credit unions has dropped by nearly a quarter. I hope to hear Chair Matz outline clear justifications for this budget increase that does not appear to match supervisory demands,” Neugebauer added.

Key Takeaways:

  • NCUA needs greater transparency and accountability to support its mission and better protect taxpayers.
  • NCUA has an important role to ensure credit unions remain sound, but there is a clear absence of adequate due diligence in its rulemaking efforts.
  • NCUA is regulating credit unions out of conformity rather than necessity
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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


Hearing entitled “Fed Oversight: Lack of Transparency and Accountability”

2015/07/07


Hearing entitled “The Future of Housing in America: Oversight of HUD’s Public and Indian Housing Programs”

2015/07/02


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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