“In the future we may have to do exceptional things again if we face a shock that large. You just don’t know what’s systemic and what’s not until you know the nature of the shock. It depends on the state of the world – how deep the recession is.”
—Treasury Secretary Geithner, testimony before Special Inspector General for TARP (SIGTARP), January 2011
Dodd-Frank Enters the Terrible Twos
This month Democrats’ permanent bailout of Wall Street law turns two years old. And like an unruly toddler on the verge of a temper tantrum, the massive regulatory structures created by the law threaten to wreak havoc on the economy during the worst unemployment crisis since the Great Depression. As Financial Services Committee Chairman Spencer Bachus (R-AL) recently said, “The layers of red tape Dodd-Frank piles on our economy cause more uncertainty for American businesses and hinder their ability to grow and create jobs.”
Issues of Concern
TOO MUCH, TOO FAST (OR SLOW?): Two years on, regulators apparently cannot even keep pace with the 400 rule writing requirements outlined in the 2,300-page law. A new study by law firm Davis Polk confirmed that only 30 percent of the rules have been finalized, with 221 statutory deadlines passed, of which only 37 percent have attendant finalized rules. But in a cruel twist, because of the sheer volume of financial rules, the slow rule writing has not meant that the economic effects are yet to be felt.
PAPERWORK PROLIFERATES: In fact, the Financial Services Committee estimates that the rules written thus far have resulted in more than 5,000 pages, requiring more than 24 million man hours every year from the private sector in attempting to comply. Little wonder then that a recent survey of small business by the Chamber of Commerce found: “Concerns about over-regulation are the highest we’ve seen in the past year, with 42% of small businesses citing it as a major concern, and 52% citing regulations as the top threat to their business.”
PILING ON SMALL BIZ: Unfortunately, small businesses are getting it from both sides as well, with their access to credit hampered as Democrats’ ill conceived law purported to rein in the excesses of Wall Street affects small banks. Matthew H. Williams, Chairman and President of a small town bank in Gothenburg, Nebraska, said in testimony about the regulatory pressures resulting from Dodd-Frank: “These pressures are slowly but surely strangling the traditional community banks, and handicapping their ability to meet the credit needs of their communities.”
What are House Republicans Doing?
House Republicans have a Plan for America’s Job Creators—it’s time for the President and Senate Democrats to stop blocking our bipartisan jobs bills. In addition to a number of hearings in the coming month by the Financial Services Committee focused on the negative impacts of Democrats’ permanent bailout of Wall Street law, House Republicans are also expected to vote on legislation aimed at reining in Washington’s red tape, such as H.R. 4078, the Regulatory Freeze for Jobs Act of 2012, sponsored by Rep. Tim Griffin (R-AR). More info in the “Win the Debate” kit—“Cutting Red Tape to Create Jobs”—can be found here.