Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today’s hearing with the Federal Reserve’s Vice Chairman for Supervision Randal Quarles:

This morning, we welcome back for his semi-annual testimony, The Honorable Randy Quarles, the Federal Reserve’s Vice Chairman for Supervision.

As we know all too well, the Dodd-Frank Act dramatically increased the Fed’s powers way beyond its traditional monetary policy responsibilities. 

Through so-called “heightened prudential standards,” the Fed can functionally now control the largest financial institutions in our economy, which is most disconcerting. Increased capital and liquidity standards, as long as they are not counter-productive or duplicative, add to stability; regulatory complexity and micro-management do not. If not properly tailored and calibrated, both hinder economic growth.   

Two weeks ago, the Fed proposed changes to the supervisory requirements for some financial institutions. These proposals are the direct result of the House-led deregulatory and pro-growth provisions contained in the “Economic Growth, Regulatory Relief and Consumer Protection Act.” These proposals are a most welcome sign of progress. But to be clear, they do not yet represent success. If they represent the Fed’s final offerings; it’s pretty thin gruel.

There is clearly a direct connection between sluggish economic growth and the regulatory tsunami we experienced for nearly two decades prior to President Trump taking office. Studies, including one by the Mercatus Center, found that regulatory drag on the economy can be attributed to a loss in real income of approximately $13,000 for every American – a staggering figure.

We should note that while total overall regulatory restrictions have increased by nearly 20 percent since 1997, regulatory restrictions on “finance and insurance” have increased by a whopping 72 percent.

That is why this Committee has devoted so much time and attention to legislation, much of it bipartisan, that properly tailors financial regulation.

Certainly we can never lose sight of systemic risk, but neither can we lose sight of economic growth which today has led to the lowest unemployment rate in 50 years, the greatest wage increases in a decade, and a resurgence of optimism by both consumers and businesses.

The Vice Chairman previously has expressed his support for a comprehensive evaluation and improvement of the post-crisis regulatory regime, guided by the principles of efficiency, transparency, and simplicity of regulation. These are indeed laudable principles. I would suggest including one other, the principle that the rule of law not be supplanted by the arbitrary discretion of the regulators. That means keeping regulators out of the board room, both literally and figuratively, and kept out of management decisions. 

While I am pleased to see this Fed’s willingness to better tailor, perform cost-benefit analyses, implement prudential regulatory risk adjustments, and propose amendments to the Volcker Rule, each of these as they stand should again be viewed simply as first steps and insufficient to truly propel our economy to sustained 4 percent economic growth.

Vice Chairman Quarles, again, I look forward to your testimony today and exploring with you the importance of ensuring that each of the Federal Reserve’s proposals arrive at results that truly are “transparent, efficient, and simple.”

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In the years following the recent financial crisis, our community financial institutions have cited costly, burdensome, and one-size-fits-all Washington regulations as major roadblocks to their ability to grow  and serve their customers. Over the past several months, the House of Representatives has passed dozens of strongly bipartisan pro-growth bills to help not only our community financial institutions but small businesses and American consumers as well. These House-passed bills lift unnecessary regulations, provide relief to Main Street, and make it easier for folks to buy a car, achieve the dream of homeownership, grow their businesses and create jobs.

These efforts by the House – which make up approximately half of the “Economic Growth, Regulatory Relief, and Consumer Protection Act” – have been recognized and praised by a wide array of outside groups, including community and state bankers associations:

Independent Community Bankers of America & Credit Union National Association

“The bill that the Senate produced, frankly, would not have been possible without the earlier action on the part of the House, which passed H.R. 10, the Financial CHOICE Act introduced by House Financial Services Committee Chairman Jeb Hensarling. Several provisions of H.R. 10 are included in S. 2155. To be sure, years of deliberation, hearings, markups, and floor votes in the House inspired and prompted the Senate to craft and consider S. 2155. This is effectively a bicameral bill; the House deserves as much credit for S. 2155 as the Senate.” -ICBA President and CEO Camden R. Fine and CUNA President and CEO Jim Nussle

American Bankers Association

“The tireless work of the House Financial Services Committee over the last six years under the leadership of Chairman Jeb Hensarling cannot be understated nor can the influence the Committee had on this critically important bipartisan agreement.”

Michigan Credit Union League, Community Bankers of Michigan, Michigan Bankers Association               

“We thank you for your leadership in the House for all you have done to bring regulatory relief to the verge of enactment.”

BB&T Corporation, Capital One Financial Corporation, The PNC Financial Services Group, Inc., U.S. Bankcorp

“Under your leadership, the House has passed bipartisan legislation that considers a firm’s business model and risk profile, rather than an arbitrary asset threshold, in regulating our financial services sector.”

 National Association of Mutual Insurance Companies

“The National Association of Mutual Insurance Companies is very appreciative of the work of Chairman Jeb Hensarling, Ranking Member Maxine Waters, and the House Financial Services Committee on reining-in our federal activity at international insurance regulatory standard-setting bodies such as the Financial Stability Board and the International Association of Insurance Supervisors.”

Texas Bankers Association

“In addition to the Senate effort, the House has worked diligently to craft and pass legislation that provides additional meaningful reform in a bipartisan manner.”

Joint letter from state-based trades

“The undersigned organizations (51) commend the House of Representatives for its enormous contributions to the provisions that developed the final work product embodied in S. 2155. The bill reflects years of House Financial Services Committee hearings and legislative deliberations, and includes numerous bipartisan provisions originated in the House. Upon enactment of this important bill, our nation’s communities will be greatly indebted to House Financial Services Committee Chairman Jeb Hensarling, his colleagues on the committee and members of the House who – along with the Senate – took action to reduce impediments to job creation and economic growth.”

Independent Insurance Agents and Brokers of America, National Association of Mutual Insurance Companies, and the Property Casualty Insurers Association of America

“The Independent Insurance Agents & Brokers of America (IIABA), the National Association of Mutual Insurance Companies (NAMIC), and the Property Casualty Insurers Association of America (PCI) are very appreciative of your leadership of the House Financial Services Committee and your efforts through the years on reforming the way that financial services regulation is done in this country. We are particularly supportive of the committee’s work on refocusing our federal activity at international insurance regulatory standard-setting bodies such as the Financial Stability Board and the International Association of Insurance Supervisors.”

Independent Community Bankers of America

“ICBA thanks the House for passing much-needed community bank regulatory relief, which will promote economic and job growth in local communities,” ICBA President and CEO Camden R. Fine said. “These important bills will help ensure that community banks can continue supporting their local consumers and small businesses.”

National Association of Federally-Insured Credit Unions

“Both the House and Senate have passed NAFCU-backed comprehensive regulatory relief bills this Congress – H.R. 10, the Financial CHOICE Act in the House and S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act in the Senate.  NAFCU is pleased to see recent reports that the House may soon act on S. 2155 in order to ensure that regulatory relief can be enacted into law this year.  We urge both the House and Senate to continue their work to ensure that this bill is enacted into law.  As with most pieces of legislation, bi-partisan and bi-cameral agreement is not an easy undertaking.  To that end, there has been much debate in the public arena as to whether S. 2155 should be amended with further additions when it is considered by the House.  NAFCU is extremely supportive of S. 2155, but also has been supportive of bi-partisan measures passed by the House since the start of this Congress.  NAFCU supports a regulatory environment that allows credit unions to thrive."

Freedom Partners

“Chairman Hensarling deserves enormous credit for seeing the big picture on the importance of enacting relief from onerous financial regulations.” -Freedom Partners Executive Vice President Nathan Nascimento

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The Subcommittee on Monetary Policy and Trade met today to evaluate the operations of the Committee on Foreign Investment in the United States (CFIUS) and the challenges it faces by a changing global economy.

“Today’s hearing is the third time this Congress that the Subcommittee has publicly examined the Committee on Foreign Investment in the United States, or CFIUS,” said Subcommittee Chairman Andy Barr (R-KY). “As the Subcommittee continues to review CFIUS and begins to consider potential reforms, it is clear that we must improve our security review process to ensure that bad actors do not get American technology or information that can be used against us. At the same time, we must make certain that the CFIUS process does not create disincentives for foreign direct investment in the United States killing jobs and the much needed capital source for national security advancements.”

Key Takeaways

• Any changes to CFIUS should enhance its ability to protect national security, not contribute to mission creep or duplicative functions that undermine its effectiveness.

• It is essential that U.S. firms continue to have access to foreign investment in order to increase productivity and create jobs.

Topline Quotes from Witnesses

“…CFIUS and export controls are both vital and robust authorities the United States relies upon to protect our national security. As we strengthen both to meet current challenges, it is important that they remain complementary and not overlap unnecessarily, as that has the potential to overburden the CFIUS process and partially duplicate the more comprehensive coverage of technology transfer under the export control system.” – The Honorable Richard E. Ashooh, Assistant Secretary for Export Administration, U.S. Department of Commerce

“…CFIUS must be modernized. In doing so, we must preserve our longstanding open investment policy. At the same time, we must protect our national security from current, emerging, and future threats. The twin aims of maintaining an open investment climate and safeguarding national security are the exclusive concern of neither Republicans nor Democrats. Rather, they are truly American aims that transcend party lines and regional interests. But they demand urgent action if we are to achieve them.” – The Honorable Heath P. Tarbert, Assistant Secretary for International Markets and Investment Policy, U.S. Department of the Treasury

“Simply put, the United States military fights and wins wars through the unmatched performance of our men and women in uniform and our superior military technology. Knowing this, our competitors are aggressively attempting to diminish our technological advantage through a multi-faceted strategy by targeting and acquiring the very technologies that are critical to our military success now and in the future. China, in particular, publicly articulates its policy of civil-military integration, which ties into its intentions to become the world leader in science and technology and to modernize its military in part by strengthening the industrial base that supports it.” – Eric D. Chewning, Deputy Assistant Secretary for Manufacturing and Industrial Base Policy, U.S. Department of Defense

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The House passed bipartisan legislation on Tuesday that provides important regulatory relief for small banks and credit unions and protects consumer access to mortgage credit.

The CFPB’s expansion of escrow requirements and guidance on escrow and mortgage servicing requirements are prime examples of the regulatory burden placed on community financial institutions.

With the smaller staff and resources of community institutions, existing escrow rules are financially and technically prohibitive.  Many community banks and credit unions lack the resources to create and maintain escrow accounts in house, and outsourcing the work is, for the most part, cost prohibitive.  The burdensome and expensive escrow requirements force small lenders to increase costs for consumers or out of the mortgage market altogether.

The Community Institution Mortgage Relief Act would relieve certain smaller banks and credit unions – those with consolidated assets of $10 billion or less and who hold the mortgage on their balance sheet for three years, and those that service 20,000 or fewer mortgage loans annually – from this onerous regulation and allow them to do what they do best: serve the financial needs of the local economy through relationship banking.

“H.R. 3971 is a narrowly focused, modest effort to resolve concerns related to the CFPB's rules implementing Dodd-Frank Act provisions on escrows and mortgage servicing. These important fixes will give smaller credit unions and community banks greater flexibility to ensure that more of their members and customers can get a loan to buy a home and stay in their homes,” said House Financial Services Committee Chairman Jeb Hensarling (R-TX). “I thank Representative Tenney, a member of the Financial Services Committee, for introducing this legislation and for leading Congressional efforts to help provide regulatory relief for small banks and credit unions from rules that are unfairly restricting consumers’ access to mortgage credit.”

The bill’s sponsor, Rep. Claudia Tenney (R-NY), said “This bipartisan bill is a step in the right direction to rollback harmful regulations that have crippled our community financial institutions. Mandating one-size-fits-all regulations places costly and unmanageable burdens on our small financial institutions. This shows just how out-of-touch Washington bureaucrats are with our local communities. The Community Institution Mortgage Relief Act works to reverse this problem by lowering the cost of credit for low-income borrowers and rolling back onerous escrow regulations that continue to drive community institutions out of the mortgage lending market. I’m grateful to Chairman Hensarling for his leadership in working to pass this important bill, and I look forward to continuing to work alongside the Financial Services Committee to roll back onerous regulations and get our economy moving again.”

The bill passed the House with bipartisan support 294-129. 

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When I talk to constituents in western Pennsylvania, I hear a common concern: some in this country are thriving and getting ahead, but many believe the American dream is moving further from their reach. Big businesses, the wealthy and well-connected are doing fine, while millions of hard-working Americans – mom-and-pop business owners and those on Main Street – face one barrier after another to their success.

Today, we have a two-speed economy, but all Americans deserve a chance at success, not just those in Washington, D.C., or those at the top.

A major cause of this two-speed economy is the failed Dodd-Frank financial control law that was imposed after the financial crisis. That bill, which spawned thousands of pages of new rules and regulations, promised an end to “Too Big to Fail” and a return to a healthy, stable economy.

Unfortunately, the outcome has been the exact opposite.

Over-regulated community banks are being merged into bigger banks, households have lost access to vital financial services, and capital for small businesses has dried up.

If anything, “Too Big to Fail” has been enshrined in law and small banks have been dubbed “Too Small to Succeed.”

House Republicans’ Financial CHOICE Act, however, will roll back Dodd-Frank’s misguided policies and replace them with new rules that will create more opportunity, choice and economic freedom for all Americans.

I support the Financial CHOICE Act because I know that it will revitalize our economy by creating the conditions for competitive, transparent and innovative capital markets. Yet, there are those – especially big banks – who oppose Financial CHOICE.

That is because the many reforms we propose are designed not to bolster the big banks, but to level the playing field for small financial institutions, some 1,600 of which have either closed or been forced to merge since the implementation of Dodd-Frank.

Financial CHOICE gives everyone a fair chance at the American dream.

Our bill accomplishes this by right-sizing regulations for community banks and incentivizing firms to adopt more conservative practices such as holding high levels of capital.

When institutions begin to flourish and thrive again, lower-income and middle-class consumers, as well as small businesses, that rely on the services of community banks will once again have more choices and better access to the products and services they need to live their daily lives and conduct their businesses.

The Financial CHOICE Act also holds bad actors accountable by increasing penalties for financial fraud. In fact, we are proposing the toughest penalties in history for financial fraud.

Our bill also promises to end “Too Big to Fail” – taxpayer-funded bailouts will be stopped once and for all.

One of the worst outcomes of Dodd-Frank was that it prompted unelected regulators to come up with thousands of pages of rules, many of which hurt consumer choice and stifled economic growth. The people’s elected representatives were largely removed from the process, giving unaccountable bureaucrats unchecked power to micromanage our financial system.

The Financial CHOICE Act fixes the rulemaking process by increasing transparency, enhancing the voice of Congress and ensuring that the rules that govern our economy are subject to cost-benefit analysis. At the very least, Washington should not support policies that hurt more than they help.

President Donald Trump spoke during his inaugural address of the “forgotten man and woman” in America.

Washington over-regulation, too, often does them real harm. The Financial CHOICE Act offers a better way – more accountability, more transparency, tougher penalties, and good regulation.

If the reforms in the Financial CHOICE Act become law, we can say goodbye to the two-speed economy and hello to financial choice and opportunity for all Americans.

U.S. Rep. Keith Rothfus, R-Sewickley, represents the 12th Congressional District. Read More

Congress will soon vote on a plan to significantly overhaul the 2010 financial control law commonly known as the Dodd-Frank Act.

This is great news for jobs and growth in Kentucky. In the nearly seven years since enactment of the 2,300-page Dodd-Frank law, roughly one in five Kentucky credit unions and community banks has closed its doors.

Nationwide, more than 43 percent of banks under $100 million in assets have disappeared. And whereas nearly 170 new banks were chartered on average per year before the financial crisis, there have been only six new bank charters total since Dodd-Frank.

This decline in community financial institutions, which account for 43 percent of all loans to small businesses and represent the only physical banking presence in 20 percent of the counties in the United States, has limited access to essential financial services and products.

For example, 72 percent of community banks report that Dodd-Frank rules have restricted their ability to extend credit for mortgages, and small-business lending from banks is at a 20-year low.

By limiting services at community financial institutions, Dodd-Frank regulations are clogging the plumbing of our economy, especially in rural and underserved communities.

For these reasons, I have been working with my colleagues on the House Financial Services Committee on a Dodd-Frank fix called the Financial CHOICE Act, which stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs. This legislation will end taxpayer bailouts for “too-big-to-fail” Wall Street firms, provide Main Street community banks and credit unions an “off-ramp” from the central planning of Dodd-Frank and provide much-needed reform to the unaccountable Consumer Financial Protection Bureau.

Dodd-Frank was supposed to solve the problem of “too-big-to-fail.” Instead, it codified into law taxpayer bailouts of large, systemically important firms. As a result, not only are small banks fewer, but Wall Street banks are bigger.

The Financial CHOICE Act will end taxpayer bailouts of big banks by replacing Dodd-Frank’s “Orderly Liquidation Authority” with a new chapter of the bankruptcy code that will better accommodate the failure of large, systemically important financial institutions, or “SIFIs.” It also repeals regulators’ authority to designate non-bank SIFIs, which signals to investors which firms would likely be bailed out by taxpayers.

Together, these provisions would thwart the contagion of “moral hazard” that occurred during the run up to the financial crisis, when some firms, including government-sponsored enterprises Fannie Mae and Freddie Mac, took on excess leverage and risk with full knowledge that Uncle Sam would bail them out in the event of a crisis. And the legislation further holds Wall Street accountable by imposing the most severe penalties in American history for financial fraud and other crimes.

Meanwhile, the Financial CHOICE Act would deliver much needed regulatory relief to Main Street.

Instead of punishing all financial institutions with Dodd-Frank rules and regulations, the Financial CHOICE Act would allow a bank or credit union to escape much of the regulatory central planning of Dodd-Frank in exchange for maintaining a simple 10 percent leverage ratio. Adequate capitalization would prevent these institutions from overextending themselves in good times and protect them from defaults in bad times.

Finally, our legislation would implement much needed reforms to the Consumer Financial Protection Bureau to enable it to better protect consumers and make it more accountable to the American people. The Financial CHOICE Act does this by subjecting the bureau to the congressional appropriations process, giving Congress the power of the purse over this agency and its regulatory overreaches for the first time. It would also reform the bureau’s unconstitutional structure by making its director removable at will by the president, establishing a Senate-confirmed inspector general, requiring cost-benefit analysis of regulatory proposals, and requiring the bureau to obtain permission prior to collecting consumers’ private financial information.

As local organizations that understand the damage Dodd Frank is doing to our economy, it is no surprise that the Kentucky Bankers Association, the Kentucky Credit Union League and Commerce Lexington have all endorsed the Financial CHOICE Act. By enacting this important legislation, we can finally hold Wall Street and Washington accountable, deliver much-needed relief to Main Street community financial institutions and create more opportunities for all Americans. Read More

Legislation to end bank bailouts, toughen penalties for wrongdoing on Wall Street, promote economic growth, and provide desperately needed regulatory relief for small community banks and credit unions passed the House Financial Services Committee 34-26 today.

The legislation – the Financial CHOICE Act – ends the Dodd-Frank Act’s taxpayer-funded bailouts of large financial institutions and imposes the toughest penalties in history on those who commit fraud and insider trading.  The bill also demands greater accountability from Washington regulators and relieves well-capitalized banks from growth-strangling regulations that slow the economy and harm consumers.

CHOICE, which stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs, received strong support from community banks and credit unions.  Large financial institutions did not offer their support for the Financial CHOICE Act.  Instead, Wall Street CEOs have said they do not support repealing Dodd-Frank.

“The Financial CHOICE Act ends bailouts so Washington can never again pick taxpayers’ pockets and hand the money over to big banks.  With the Financial CHOICE Act, the era of big bank bailouts and ‘too big to fail’ will be over.  There will be bankruptcy for failed banks, not bailouts.  And banks that qualify for much-needed regulatory relief will be so well-capitalized that they pose no threat to taxpayers or the economy.  Our plan replaces Dodd-Frank’s growth-strangling regulations on small banks and credit unions with reforms that expand access to capital so small businesses on Main Street can grow and create jobs,” said Chairman Jeb Hensarling (R-TX).

Vice Chairman Patrick McHenry (R-NC) said, “Since President Obama signed it into law, Dodd-Frank has made it more expensive for American families to save and borrow while also creating a regulatory climate that has hurt small business growth nationwide. Today’s vote on the Financial CHOICE Act is an important step in our work to undo the damage done over the last seven years.”

Oversight and Investigations Subcommittee Chairman Ann Wagner (R-MO) said, "For nearly 8 years, the Dodd-Frank Act and the Obama Administration’s ‘Washington-knows-best’ mindset have crippled the growth of our national economy. When I voted today to pass the Financial CHOICE Act out of Committee, I kept the needs of our families and small businesses in mind. Americans deserve greater access to consumer products and advice, more transparency and accountability, and most of all a stronger economy that boasts a level playing field and spurs job growth and creation. The Financial CHOICE Act will deliver on these promises we made in November and I applaud Chairman Hensarling for his leadership in moving this legislation forward."

Monetary Policy and Trade Subcommittee Chairman Andy Barr (R-KY) said, “Seven years after enactment of the Dodd-Frank Act, it is clear we need significant reforms to better protect consumers, grow our economy, and provide regulatory relief.  The Financial CHOICE Act will deliver these reforms to ensure all Americans have greater opportunities and that hard working taxpayers are never again asked to bailout Wall Street’s biggest banks.  I appreciate the leadership of Chairman Jeb Hensarling in shepherding this bill successfully through the Financial Services Committee markup and I look forward to working with him and my colleagues to provide relief for the customers of Kentucky’s community banks and credit unions.”

Financial Institutions and Consumer Credit Subcommittee Chairman Blaine Luetkemeyer (R-MO) said, “The premise of the Financial CHOICE Act is simple: change the current regulatory paradigm in order to offer a new model that benefits taxpayers, consumers, and our local communities. The CHOICE Act will hold Washington and Wall Street accountable by replacing ‘too big to fail’ with bankruptcy and ‘too small to succeed’ with some common-sense regulatory relief. I’m proud to have worked with Chairman Hensarling on this critical legislation so that every American has the opportunity to achieve financial independence. The passage of the CHOICE Act is a victory for consumers, taxpayers, and economic growth.”

Terrorism and Illicit Finance Subcommittee Chairman Steve Pearce (R-NM) said, “What was intended to serve as a watchdog over large financial institutions, ended up crippling consumer access to credit and financial services. Dodd-Frank has forced banks to push burdensome regulatory fees onto the backs of hardworking families, individuals, and small businesses. The community banks in rural parts of America seem to be the ones carrying the heaviest burdens of these regulations. The reality is, Wall Street is not going to come to New Mexico to help people in rural communities afford housing, nor will they come out to lend to our small businesses that help strengthen our economy. Small financial institutions are the lifeblood of New Mexican businesses and families, and we must support them. The CHOICE Act will overhaul these Dodd-Frank regulations that areas like my district will benefit from the most.”

Capital Markets, Securities and Investment Subcommittee Chairman Bill Huizenga (R-MI) said, “For the last six years, Dodd-Frank has made it more difficult for hardworking Americans to secure a future for themselves and their children. Today, House Republicans took an important step forward in the effort to reverse that trend and strengthen our economy by advancing the Financial CHOICE Act.  The Financial CHOICE Act enacts pro-growth reforms that allow community banks and credit unions to better serve their customers and facilitate small business job creation, restores accountability to both Wall Street and Washington, and protects taxpayers from future taxpayer-funded bailouts by ending ‘too big to fail’ once and for all.  Additionally, the Financial CHOICE Act takes crucial steps to modernize the Federal Reserve and make it more accountable and transparent to the American people. These important reforms include an audit of the Fed so policymakers and everyday Americans have a more informed understanding of how the Fed is impacting our economy.  I look forward to continuing this important debate as the full House of Representatives considers this critical piece of legislation.”

Housing and Insurance Subcommittee Chairman Sean Duffy (R-WI) said, "Millions of Americans are still suffering from President Obama’s economic policies, and the disastrous Dodd-Frank Act. Since it was shoved through Congress, bank fees have gone up, free checking is all but gone, and small community banks have been choked out of existence. Dodd-Frank’s regulations have made it harder to achieve the American Dream.  Thankfully, under Chairman Hensarling’s leadership, there is a better way. The Financial CHOICE Act is an off-ramp from Dodd-Frank’s rules and regulations, will help restore our small community banks and credit unions to their important role in our communities, and will jumpstart economic growth.  I am pleased that several of my ideas are incorporated into the bill, including reining in the CFPB by prohibiting them from soliciting information on non-public personal information without your permission, putting a stop to the CFPB's wasteful use of taxpayer dollars, and making significant changes to the SEC on the registration of proxy advisory firms that prohibit unfair, coercive, and deceptive practices."

For more information about the Financial CHOICE Act, including an executive summary, a comprehensive and legislative text, please visit www.FinancialCHOICE.gop.

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Under the Obama Administration we saw the rise of imperial Washington, D.C., with the crushing weight of regulations from healthcare to energy to financial services harming small businesses and families from the coasts to the heartland. I hear it from my constituents each and every time I am in the grocery store in St. Louis or at Mass on Sundays – they're hurting, and they're hurting because of unelected, unaccountable bureaucrats in Washington who are dictating their financial decisions and have no connection to the lives led by everyday Americans.

The Obama-era behemoth known as The Dodd–Frank Wall Street Reform and Consumer Protection Act has targeted Main Street pocketbooks and stripped families of real opportunities for financial success and independence. For nearly 10 years following our country's financial crisis, our country witnessed one of the weakest recoveries of our lifetimes, as Dodd-Frank held small businesses and families hostage and prevented our economy from growing. We've also watched as bureaucrats at the Consumer Financial Protection Bureau (CFPB) have spent years removing choices and making access to financial products more difficult to obtain. Under the well-messaged guise of "consumer protection," the Bureau has continuously failed to properly monitor actual instances of consumer fraud, just as we saw with the opening of more than a million unauthorized accounts at Wells Fargo.

Plain and simple, since the CFPB's creation under Dodd-Frank we have seen egregious regulations put in place that make it harder for families to qualify for a mortgage, obtain an auto loan and access other forms of credit that they depend on every day. Something as simple as free checking has become burdensome under the dominion of Dodd-Frank, as 75 percent of banks offered this product before the law was passed, and just two years later only 39 percent of banks offered free checking.

But our Republican-led Congress has a better way – The Financial CHOICE Act, which stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs. And that's exactly what we're going to do: provide you with the financial opportunities you deserve.

As a member of the House Financial Services Committee, I know the Financial CHOICE Act will help reverse years of mismanagement and unaccountability, while fueling our economy to provide Missourians and all Americans with more jobs, higher wages and faster growth. The Financial CHOICE Act will also allow us to impose the toughest penalties onto Wall Street executives who engage in fraud, deception and self-dealing. Unlike before, executives who commit financial crimes will be held accountable, rather than innocent taxpayers and shareholders.

Through the Financial CHOICE Act, Congress has a profound opportunity to replace Dodd-Frank, increase lending in our communities, open up our economy, end taxpayer-funded bank bailouts and hold Wall Street and Washington accountable. Plain and simple, Americans should be excited about the Financial CHOICE Act. Through this legislation, we're going to reverse years of misconduct and finally get our economy back on track.

In November, Americans spoke loud and clear in favor of a government that would be less-intrusive and offer more opportunities for success. As Congress works with the Trump Administration to pass the Financial CHOICE Act, I am keeping you in mind. You deserve greater access to consumer products and advice, you deserve more transparency and accountability, and most of all you deserve a stronger economy that boasts a level playing field and spurs job growth and creation. We will deliver on these promises.

Congresswoman Ann Wagner (R-MO) represents the Second District of Missouri and serves as chairman of the House Financial Services Oversight and Investigations Subcommittee. Prior to being elected to Congress in 2012, she served as U.S. Ambassador to Luxembourg under President George W. Bush.

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The United States has a rich history of bank crises. In fact, we’re number two in the world, with 13 all-time, just behind France with 15, and just ahead of the United Kingdom, with 12. Our first major banking regulation law, the National Currency Act, was passed in 1863 as a response to a bank failure rate of fifty percent. Each successive crisis, the Panic of 1907, the Great Depression, the Savings and Loan Crisis of 1982, the Housing Bust of 2007 (to name a few) triggered a new wave of financial regulation. Dodd-Frank, passed in early 2010, is the latest of these waves.

There’s a saying in the military that generals spend a great deal of time fighting the last war. It strikes me, looking at the historical pattern, that this is also true of financial regulators. They pass laws and make changes based on what happened last time, but the next crisis is always based on a new systemic weakness that no one sees. Dodd-Frank builds on this history by adding major new regulations that create massive compliance costs while keeping the same problems that led to the crisis in the first place.

I came to Congress a little over four months ago. If I leave Washington having helped put through a law that will break the bailout, regulate, rinse, repeat cycle, I will consider the time away from home well spent. I serve on the Financial Services Committee, and we’re working on a bill that I think will go a long way towards stopping the bailouts, while at the same time cutting back on the Dodd-Frank red tape that’s been slowly strangling community banks.

The core of our bill, the Financial Choice Act, is relatively simple, as bank regulation goes. Under the bill, banks in essence have two options: they can live under Dodd-Frank, or they can keep a certain amount of high-quality capital on hand to cushion losses. That amount, or ratio, is around 10 percent of their total loans or investments, more than triple what the big banks had on hand pre-financial crisis. In fact, of the banks that did have a 10 percent ratio during the crisis, more than 98 percent survived. Right now most of the big banks are hovering a little above 6 percent, and requiring them to go to ten would cost them billions in foregone profits. If that means that the system as a whole is more durable and banks get out from under Dodd-Frank, then I think that’s a fair tradeoff.

Most community banks, on the other hand, are well above 10 percent. For instance, Blue Harbor Bank in my district has a ratio of 15 percent. That’s not out of the goodness of their heart–community banks know that if they fail, the federal government won’t bail them out, so they have to operate more conservatively. They don’t get to cover their bets with taxpayer funds, and as a result they’re more careful with the loans and investments they do make. At the same time, they’re hit with Dodd-Frank regulations. Even now, large banks keep lower ratios in part because of the widespread assumption that they will be bailed out in a crisis. What the 10 percent requirement of the Financial Choice act is about is levelling the playing field–treating all banks equally, large and small.

That brings me to another feature of the bill, which creates an orderly method to unwind failed financial institutions through the bankruptcy courts. Chapter 11 bankruptcy has historically been the way insolvent business are dealt with, providing a path for debtors to continue business operations and creditors to get their money back, if possible. It’s not well-designed for large financial institutions because it does not take into account the notion that the company in bankruptcy may impact the national economy, something that is true for very large banks but not for most companies.

The Financial Choice Act adds a new section to chapter 11 to allow financial regulators the opportunity to participate in the bankruptcy process, and to ensure that bankruptcy of a large bank does not cause a full-blown crisis. The benefits of having a clear process up front for unwinding big banks means that there’s a clear plan of action in case a crisis occurs, eliminating the need for bailouts.

Together, these two provisions both significantly reduce the chance of future crises, and reduce the chance of future bailouts. There is no question that our country will have its 14th financial crisis at some point in the future. We owe it to the country to do everything we can to make sure that we reduce its impact through sound regulation, so that when it does happen, big banks that take on too much risk are subject to the discipline of a well-established legal process, not a bailout.

Congressman Ted Budd serves the people of North Carolina’s 13th congressional district in the U.S. House of Representatives.



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Economists at a prominent think tank based in Washington, D.C. last week reported that a full repeal of the Dodd-Frank Wall Street Reform and Consumer Protection Act would boost the economy by one percent and generate $340 billion in federal revenue over a 10 year period.

Dodd-Frank, as it is called for short, was passed by the Democrat controlled Congress and signed into law by President Obama in 2010. At more than 2,000 pages, the law is the most sweeping financial regulation enacted since the Great Depression era.

It was sold to the American public as a Washington crackdown on greedy Wall Street banks that put the U.S. economy into a tailspin. Crafty messaging professionals created an advertising gimmick in the title of the law itself.

But as the saying goes: You can’t judge a book by its cover.

Rightfully, at the time, the American people wanted their government to respond to an economic collapse and it did. The problem was that the action that was taken did too little to prevent history from repeating itself and too much to hurt the little guys that were in no way responsible for the Great Recession.

In our home state of Texas, since Dodd-Frank’s implementation, community banks have closed their doors and no new banks have been chartered. Considering most small businesses, which represent 99.7 percent of all U.S. businesses, rely on local lenders to expand, create jobs and conduct further research and development, Dodd-Frank has, and will continue to have, negative effects on the U.S. economy.

In a recent op-ed in The Hill newspaper, those same think-tank economists wrote, “There is good reason to believe (Dodd-Frank) may also increase the frequency and severity of recessions and may diminish innovation in the financial sector and elsewhere.” Simply, Dodd-Frank was the wrong prescription for our nation’s troubled financial sector.

That is why my colleagues and I on the House Financial Services Committee have a plan that will actually prevent a similar financial collapse from happening again while, at the same time, lessen the current overregulation of Main Street.

Our Dodd-Frank replacement, the CHOICE Act, will impose the toughest penalties in history for financial fraud and will once and for all end taxpayer funded bank bailouts.

The CHOICE Act will force more accountability on both the banks on Wall Street and on the bureaucracies in Washington that have forced unnecessary, costly compliance measures on mom-and-pop shops throughout the country. Washington’s regulators will be accountable to members of Congress, rather than being allowed to make decisions without any repercussions from American voters.

In a recent piece that I wrote with U.S. Sen. David Perdue, we said that legitimate oversight over the financial sector is important. Very few, if any, lawmakers will disagree with this sentiment.

Today, the federal government is wrongly deflecting blame to smaller financial institutions that cannot, and should not be required to, meet arbitrary compliance measures that are forcing them out of business. The CHOICE Act will correct that and actually punish bad actors who wreak havoc on the livelihoods of everyday hardworking Americans.

Williams, a Republican from Austin, serves on the Financial Services Committee in the U.S. House of Representatives. He is the vice-chair of the subcommittee on Monetary Policy and Trade.

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