H.R. 4173 makes permanent the bailout policies used to prop up AIG, Fannie Mae, Freddie Mac, GM and Chrysler, and other failing firms.  The FDIC would be authorized to extend federal guarantees and loans to financially troubled firms for the sake of "financial stability," and the agency would not be required to unwind such a failing firm-certain parts of the company could be propped up indefinitely using taxpayer dollars.  Since some institutions would be considered "too big to fail" (likely those that happen to be "politically significant"), bailouts are inevitable.  The proposal also gives government regulators the authority to dismantle large firms even if those firms are economically healthy and well-capitalized.

H.R. 4173 restricts the use of derivatives.  Derivatives encourage job creation and provide customized hedges to help businesses like farmers, grocery stores and energy companies to manage price volatility, so that retail prices can remain low and stable.   Yet, H.R. 4173 authorizes government regulators to arbitrarily impose capital and margin requirements for "over the counter" (OTC) derivatives, and impose new capital requirements for cleared swaps, which would lead to increased retail prices and make it less likely that corporations could engage in responsible risk management. 

The bill also expands the reach of government in the financial services industry, allowing bureaucrats to determine types and terms of credit products offered to consumers, H.R. 4173 would establish an independent agency in the executive branch to regulate financial products and services-the so called Consumer Financial Protection Agency (CFPA).  An unelected "credit czar" could dictate what financial products could be offered and at what terms, drastically reducing the number of financial products available and driving up the cost of credit generally.

H.R. 4173 undermines safety and soundness by separating the regulation of protecting consumers from ensuring safety and soundness, creating a conflict between numerous existing agencies.  Agencies need the ability to consider safety and soundness and consumer protection together to ensure that a balance is achieved and neither responsibility is neglected or jeopardized.

The bill provides the trial bar with a windfall by authorizing the SEC to restrict the use of arbitration agreements for disputes arising under federal securities laws (and granting similar authority to the CFPA in the consumer credit context).  Arbitration agreements in the securities industry provide investors the opportunity to have their claims heard close to home, before highly trained and experienced arbitrators, in a forum that has proven to resolve disputes at least as fairly as the judicial system, and much faster and less expensively.

H.R. 4173 empowers federal regulators to impose wage controls on private sector employees.  The bill requires the federal financial regulators to prescribe joint regulations that prohibit any compensation structure or incentive-based payment arrangement that encourages "inappropriate risks" by financial institutions.  Firms under the jurisdiction of the proposed plan would no longer be able to make market-based determinations regarding compensation and other incentives for its employees.  Instead, those decisions would be made by government bureaucrats.

H.R. 4173 makes permanent the bailout policies used to prop up AIG, Fannie Mae, Freddie Mac, GM and Chrysler, and other failing firms.  The FDIC would be authorized to extend federal guarantees and loans to financially troubled firms for the sake of "financial stability," and the agency would not be required to unwind such a failing firm-certain parts of the company could be propped up indefinitely using taxpayer dollars.  Since some institutions would be considered "too big to fail" (likely those that happen to be "politically significant"), bailouts are inevitable.  The proposal also gives government regulators the authority to dismantle large firms even if those firms are economically healthy and well-capitalized.

H.R. 4173 restricts the use of derivatives.  Derivatives encourage job creation and provide customized hedges to help businesses like farmers, grocery stores and energy companies to manage price volatility, so that retail prices can remain low and stable.   Yet, H.R. 4173 authorizes government regulators to arbitrarily impose capital and margin requirements for "over the counter" (OTC) derivatives, and impose new capital requirements for cleared swaps, which would lead to increased retail prices and make it less likely that corporations could engage in responsible risk management. 

The bill also expands the reach of government in the financial services industry, allowing bureaucrats to determine types and terms of credit products offered to consumers, H.R. 4173 would establish an independent agency in the executive branch to regulate financial products and services-the so called Consumer Financial Protection Agency (CFPA).  An unelected "credit czar" could dictate what financial products could be offered and at what terms, drastically reducing the number of financial products available and driving up the cost of credit generally.

H.R. 4173 undermines safety and soundness by separating the regulation of protecting consumers from ensuring safety and soundness, creating a conflict between numerous existing agencies.  Agencies need the ability to consider safety and soundness and consumer protection together to ensure that a balance is achieved and neither responsibility is neglected or jeopardized.

The bill provides the trial bar with a windfall by authorizing the SEC to restrict the use of arbitration agreements for disputes arising under federal securities laws (and granting similar authority to the CFPA in the consumer credit context).  Arbitration agreements in the securities industry provide investors the opportunity to have their claims heard close to home, before highly trained and experienced arbitrators, in a forum that has proven to resolve disputes at least as fairly as the judicial system, and much faster and less expensively.

H.R. 4173 empowers federal regulators to impose wage controls on private sector employees.  The bill requires the federal financial regulators to prescribe joint regulations that prohibit any compensation structure or incentive-based payment arrangement that encourages "inappropriate risks" by financial institutions.  Firms under the jurisdiction of the proposed plan would no longer be able to make market-based determinations regarding compensation and other incentives for its employees.  Instead, those decisions would be made by government bureaucrats.

H.R. 4173 makes permanent the bailout policies used to prop up AIG, Fannie Mae, Freddie Mac, GM and Chrysler, and other failing firms.  The FDIC would be authorized to extend federal guarantees and loans to financially troubled firms for the sake of "financial stability," and the agency would not be required to unwind such a failing firm-certain parts of the company could be propped up indefinitely using taxpayer dollars.  Since some institutions would be considered "too big to fail" (likely those that happen to be "politically significant"), bailouts are inevitable.  The proposal also gives government regulators the authority to dismantle large firms even if those firms are economically healthy and well-capitalized.

H.R. 4173 restricts the use of derivatives.  Derivatives encourage job creation and provide customized hedges to help businesses like farmers, grocery stores and energy companies to manage price volatility, so that retail prices can remain low and stable.   Yet, H.R. 4173 authorizes government regulators to arbitrarily impose capital and margin requirements for "over the counter" (OTC) derivatives, and impose new capital requirements for cleared swaps, which would lead to increased retail prices and make it less likely that corporations could engage in responsible risk management. 

The bill also expands the reach of government in the financial services industry, allowing bureaucrats to determine types and terms of credit products offered to consumers, H.R. 4173 would establish an independent agency in the executive branch to regulate financial products and services-the so called Consumer Financial Protection Agency (CFPA).  An unelected "credit czar" could dictate what financial products could be offered and at what terms, drastically reducing the number of financial products available and driving up the cost of credit generally.

H.R. 4173 undermines safety and soundness by separating the regulation of protecting consumers from ensuring safety and soundness, creating a conflict between numerous existing agencies.  Agencies need the ability to consider safety and soundness and consumer protection together to ensure that a balance is achieved and neither responsibility is neglected or jeopardized.

The bill provides the trial bar with a windfall by authorizing the SEC to restrict the use of arbitration agreements for disputes arising under federal securities laws (and granting similar authority to the CFPA in the consumer credit context).  Arbitration agreements in the securities industry provide investors the opportunity to have their claims heard close to home, before highly trained and experienced arbitrators, in a forum that has proven to resolve disputes at least as fairly as the judicial system, and much faster and less expensively.

H.R. 4173 empowers federal regulators to impose wage controls on private sector employees.  The bill requires the federal financial regulators to prescribe joint regulations that prohibit any compensation structure or incentive-based payment arrangement that encourages "inappropriate risks" by financial institutions.  Firms under the jurisdiction of the proposed plan would no longer be able to make market-based determinations regarding compensation and other incentives for its employees.  Instead, those decisions would be made by government bureaucrats.