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.
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.Read More
The months following the 2008 financial crisis were devastating for many Americans. Hardworking men and women lost their jobs, their savings, their pensions, and their homes. But instead of taking steps to strengthen consumer protections and bring stability to the financial system, Congress and the Obama Administration responded with the Dodd-Frank Act.
This piece of legislation and its associated financial regulations made an already complex regulatory environment even more complicated, made “too big to fail” the law of the land, and ultimately created new barriers for individuals and families seeking to better their lives.
To understand the negative impact that the Dodd-Frank Act has had on communities across the country, we must look at the effect that the law and its associated regulations have had on the U.S. gross domestic product (GDP), which is the aggregate measure of economic growth. In May 2015, the American Action Forum (AAF) estimated that Dodd-Frank would reduce GDP by $895 billion between 2016 and 2025. In 2016, the U.S. saw only 1.6 percent GDP growth, and the Congressional Budget Office has predicted long-term average GDP growth of only 2 percent.
What does this mean for the average American? The GDP is directly related to the U.S. standard of living, which is defined as the “degree of wealth and material comfort available to a person or community.” An analysis by the AAF shows that 2 percent GDP growth combined with 1 percent projected population growth translates to only 1 percent per capita GDP growth. At only 1 percent per capita GDP growth, it will take the average person roughly 70 years to double their standard of living.
This projection is startling, especially when we think about young adults who are entering the workforce in their twenties. In 2015, an analysis by the Economic Policy Institute showed that on average, young high school graduates working full-time had an annual income of $21,600. Young college graduates working full time had an average annual income of $37,300. With only 2 percent GDP growth, the average young person would have to work well into their nineties to double their income.
It doesn’t sound like we are setting our kids on a prosperous path, does it?
Under the leadership of Chairman Jeb Hensarling, the Financial Services Committee has developed the Financial CHOICE – creating hope and opportunity for investors, consumers, and entrepreneurs – Act to help jumpstart our economy and create more jobs and opportunities for families and individuals across the country.
Among the many provisions included in the Financial CHOICE Act is my bill, the Taking Account of Institutions with Low Operation Risk (TAILOR) Act. The TAILOR Act will help reform one-size-fits-all regulations and restore job creation on Main Street by ensuring community banks in Colorado aren’t regulated the same way as the big banks on Wall Street.
Additional provisions in the CHOICE Act:
It is well past time that Congress remedy the consequences of Dodd-Frank and our overly complicated financial regulatory system. The Financial CHOICE Act will help individuals and families say goodbye to the policies that are holding them back, and I’m looking forward to delivering these important reforms to Coloradans and all Americans.Read More
Eight years ago, the nation experienced the worst financial crisis in 80 years, which cost millions of Americans their savings, their homes, and their jobs. The response – one that was well-intended, but overly broad -- expanded the federal government’s footprint in our lives and inadvertently left us more vulnerable to the next crisis.
Since the passage of the Dodd-Frank Act in 2010, regulators have promulgated thousands of pages of regulations, saddling America’s banks with compliance costs that have reduced the services they can offer and increased the fees they charge.
The average American now pays $118 per year in checking fees and the account balances needed to qualify for free-checking have tripled, from $250 to $750. As a result, approximately 1 million people – mainly low-income families – have joined the ranks of the unbanked.
Meanwhile, we continue to hear the stories of small banks having to hire more compliance officers than lending officers – and even buckling under the weight of new regulations.
According to FDIC data, since 2010, more than 2300 community banks have either closed or been forced to merge, at a rate of 60 per quarter – and 16 percent of our remaining community banks have stopped or plan to stop making mortgages as a result of Dodd-Frank. Fewer banks means diminished access to capital – the capital needed to launch a new business, expand an existing business, or buy a home.
It is no coincidence that economic growth has been an anemic 2.2 percent since 2010 – the worst post-recession recovery on record. A return to the healthy growth rate of 3.5 percent annually that the U.S. economy enjoyed for a half a century following World War II would mean more jobs, more opportunity, and higher wages.
That’s why House Republicans, led by Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, on which I’m proud to serve, have introduced the Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs (CHOICE) Act.
This common sense alternative to Dodd-Frank represents a fundamental break from the overregulation and micro-management of banks by Washington bureaucrats in favor of strong capital and the freedom to serve the financial needs of American households and businesses.
The CHOICE Act rests on the following sound principles:
· Every American must be afforded the opportunity to achieve financial independence.
· Consumers must be protected from financial fraud, but also from the loss of economic liberty.
· Taxpayer bailouts of financial institutions must end and no company must ever be considered too-big-to-fail.
· Economic growth for all must be revitalized through competitive, transparent, and innovative capital markets.
· Simplicity must replace complexity, because complexity can be gamed by the well-connected or abused by the powerful.
· Both Wall Street and Washington must be held accountable, and the financial futures of Americans should not be subject to the political environment.
Pursuant to these basic principles, the CHOICE Act’s foundation is the understanding that plentiful bank capital is the cornerstone of a strong, healthy, and resilient financial system ready to effectively and reliably fuel the financial needs of a robust economy.
The CHOICE Act offers the nation’s banks a choice: in exchange for holding capital amounting to at least 10 percent of their total assets – a ratio significantly higher than what is currently required – banks would be exempted from the Dodd-Frank regulatory regime as well as a number of other regulatory burdens that pre-date Dodd-Frank.
To avail themselves of the CHOICE option, most big banks would have to raise a significant amount of capital. Community banks, by contrast, are already generally well-capitalized and would have to raise little to no capital in order to shed constricting regulations.
The financial system is the economy’s cardiovascular system, circulating the lifeblood of capital and credit to our businesses and families.
To achieve the rates of economic growth that hard-working American families need and deserve, we need a financial system that is strong, resilient, and innovative.
The CHOICE Act will bring us closer to that goal.
Congresswoman Love represents Utah's 4th District.Read More
The economic downturn in 2008 cost Michiganians their jobs, families their savings, and some even their homes. In response to this seismic event, Democrats in Congress passed and President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. According to its supporters, Dodd-Frank was a panacea of regulatory solutions that would end “too big to fail” and prevent a future financial crisis.
In reality, Dodd-Frank has made it even more difficult for struggling families across Michigan to secure a future for themselves and for their children.
First, Dodd-Frank did not end the notion that certain banks are “too big to fail.” Instead, it enshrined it. Today, hardworking taxpayers continue to be on the hook for Wall Street’s poor business decisions thanks to Dodd-Frank’s bailout fund. Secondly, since Dodd-Frank was enacted, the largest banks are even bigger while the small banks are fewer. Community financial institutions that had nothing to do with the crisis are being strangled by overly burdensome regulations that were intended for massive banks. But we need our community and midsize regional financial institutions to be able to lend to consumers and small businesses so they can innovate, invest and create jobs.
To restore economic opportunity to hardworking families, I am working with my colleagues on the financial services committee to introduce the Financial CHOICE Act. This commonsense legislation will protect consumers by restoring accountability, ending taxpayer bailouts, and providing regulatory relief for community financial institutions.
At the center of this legislation is accountability. It requires strong capitalization standards for banks and imposes the toughest penalties in history to protect consumers from financial fraud. The Financial CHOICE Act also holds Washington bureaucrats accountable to the American people by placing the regulators themselves under Congressional Appropriations.
Since Dodd-Frank passed in 2010, big banks have gotten bigger and small banks have disappeared at an alarming rate. The Financial CHOICE Act protects taxpayers by eliminating “too big to fail” labels once and for all. Instead, we repeal this self-fulfilling prophecy and require failing institutions to liquidate through a streamlined bankruptcy without depending on taxpayer dollars.
Dodd-Frank created a one-size fits all regulatory structure that treats community banks the same as Wall Street Banks. Unlike some of the largest banks, community financial institutions across Michigan can’t afford to hire hundreds of lawyers and compliance officers to sort through Dodd-Frank’s red tape. These regulatory costs are passed on to consumers in the form of increased fees, fewer products and services, and more limited credit options. The Financial CHOICE Act eliminates this one-size-fits-all regulation by providing commonsense relief that allows community banks and credit unions to utilize their resources for lending and meeting the needs of their customers.
This bill will protect taxpayers and consumers from anti-growth Dodd-Frank regulations, and help hardworking Michiganians achieve financial independence.
Rep. Bill Huizenga, R-Holland, represents Michigan’s 2nd Congressional district, and chairs the House Financial Services’ Subcommittee on Capital Markets, Securities & Investment.
LINK to original story in The Detroit News
For seven years now, the Dodd-Frank Act has stifled the American Dream — for half of the country.
Let me explain.
After the 2008 financial crisis, the economy was in dire straits. Washington responded with the Dodd-Frank Act, a sweeping overhaul of the American financial regulatory system, implementing the strongest regulations seen since FDR's New Deal.
Since 2008, some of America's large firms and large metropolitan cities have experienced positive post-recession recovery. Today's rising stock market figures indicate that our economy is prosperous and gaining strength with each day. It appears as though this is a time of growth for businesses, and this is true for the portion of Americans who have already established their financial independence.
You aren't hearing the story of the other half of America.
Our smaller communities and hopeful entrepreneurs have been shut out. Those who are seeking to start or grow their small business are incapable of accessing the capital necessary to merely plant both feet on the ground. Favorable stock market figures aren't translating to the average American's paycheck.
The celebrated American Dream of starting a business and attaining true financial independence is not achievable for these individuals because President Obama and Dodd-Frank's America put big cities and big banks first.
The poorly-constructed, 2,000-page Dodd-Frank Act has ballooned to 25,000 pages of rules and regulations. It appears Washington forgot that real people rely on banks to access the capital they need to finance their businesses, educations and homes.
In deeming a select group of banks "too big to fail," Washington saved Wall Street from collapse, but as a result, unelected bureaucrats and overregulation handcuffed community banks, regional banks, credit unions and other lenders.
These smaller financial institutions have their hands tied with onerous regulations and high compliance costs, and their ability to loan money is constrained.
To provide the relief these Americans need, Congress must roll back some of the heavy-handed Dodd-Frank provisions.
That is the only way to fuel our economic engine in West Tennessee and across the country.
In 2010, I joined the board of BankTennessee, a community bank in West Tennessee. It is no secret that this was an unfavorable time to join a bank board, as it was just two years after the financial crisis. The economy was stagnant, and banks across the country were struggling to resume routine business.
Joining the board of BankTennessee in 2010, the year of Dodd-Frank's fruition, afforded me a unique vantage point to observe six years of the palpable damage the law inflicted on America's small businesses and financial institutions.
After seeing the obstacles BankTennessee and banks across the nation faced following the crisis, I know how important it is to roll back Dodd-Frank so, once again, individuals can access capital.
This was one of the reasons I decided to run for Congress.
After being elected to the House of Representatives, I set my sights on becoming a member of the financial-services committee –a committee enthusiastic about the economic opportunities that lie on the other side of regulatory reform.
Rural communities and our working class — made up of some of the most patriotic and dedicated people in America — have not had the luxury of Washington's protection.
A majority of Americans cited the economy as their number one concern in the voting booth last November. President Donald J. Trump was elected because he recognized that half of America has been left behind in this two-speed economy.
Now, as a member of the financial-services committee, I am working with Chairman Jeb Hensarling and my colleagues on the committee to change the current system.
In our first full committee hearing this February, Federal Reserve Chair Janet Yellen delivered her semiannual monetary policy report to Congress. A couple things stood out to me in her remarks. Chair Yellen said that our nation is at full employment and that, while there is still room for improvement, wages are rising.
Chair Yellen should take a drive through West Tennessee. She would see how that may be true for the half of America that benefitted from Dodd-Frank. Unfortunately, Chair Yellen's evaluation was not considering a dynamic economy — an economy that encourages new businesses, new job creation and new salaries.
In 2014, the number of small businesses added to the economy was 650,000 firms short of the average. That translates to a loss of roughly 6.5 million jobs.
By implementing one-size-fits-all regulations, Washington bureaucrats have made lending nearly impossible for smaller banks, shutting down their ability to empower dependable clients who would reinvest in their communities.
With nowhere else to turn, entrepreneurs and small businesses who do not qualify for bank loans turn to credit cards and home-equity lines of credit, but Dodd-Frank has shut down these avenues, with credit-card issuance at a record low of 50 million fewer accounts than before the recession.
The American people should be in charge of their own economic opportunity, not bureaucrats in Washington.
Now, Congress and the Trump administration have an opportunity to roll back the regulations causing this dichotomy in the American economy.
The financial-services committee has already hit the ground running on legislation that will dismantle Dodd-Frank and open the door for all Americans to achieve financial independence. I am encouraged by the ambitious and productive schedule Chairman Hensarling has mapped out.
Our committee is working to grow the American economy and help put more people back to work with full-time, good-paying jobs.
Dodd-Frank created two Americas, but I see a unified U.S. economy that serves all Americans.
Commentary by Rep. David Kustoff (R-TN), who represents Tennessee's 8th District, which includes 13 counties and portions of Shelby and Benton Counties. Kustoff also serves as a member of the House financial-services committee. Follow him on Twitter @repdavidkustoff.
LINK to original story.