Tags: Hensarling | dodd frank | banks | regulation

Rep. Hensarling: Time to End Dodd-Frank Stranglehold

Image: Rep. Hensarling: Time to End Dodd-Frank Stranglehold
(Brendan Hoffman/Getty Images)

By    |   Monday, 20 Jul 2015 11:12 AM

After five years on the books, the Dodd-Frank law has been a failure, destroying small banks, reducing access to credit, and creating conditions for financial instability, said Rep. Jeb Hensarling.

In an opinion piece for The Wall Street Journal, the Texas Republican and chairman of the House Financial Services Committee, said the law was based on a faulty premise that deregulation caused the financial crisis. Instead, he contends, it was "dumb regulation," something that the measure did not address.

"Tuesday will mark five years since President [Barack] Obama's signing of the Dodd-Frank law, the most sweeping rewrite of the country's financial laws since the New Deal. Mr. Obama told the country that the legislation would 'lift our economy.' The statute itself declared that it would 'end too big to fail' and 'promote financial stability," he wrote.

"None of that has come to pass. Too-big-to-fail institutions have not disappeared. Big banks are bigger, small banks are fewer, and the financial system is less stable. Meanwhile, the economy remains in the doldrums."

Hensarling said that while Dodd-Frank was meant to target Wall Street, it hit Main Street hard. He said that community financial institutions, which make the vast majority of small business loans, have been overwhelmed by the complexity of the law and it has lead to small bank closures.

Since the law was passed, the number of banks offering free checking has decreased dramatically while banking fees have increased.

Instead of making the financial system more secure, he said, many of the threats to financial stability that were identified in the latest report of Dodd-Frank's Financial Stability Oversight Council are the result of the law itself and other government policies.

"What is most disturbing about Dodd-Frank is the authority it gives bureaucrats to control huge swaths of the economy. The director of the Consumer Financial Protection Bureau, an agency created by Dodd-Frank, can declare any consumer-credit product 'unfair' or 'abusive' and outlaw it. Oversight? CFPB funding is not subject to congressional appropriations, and Dodd-Frank requires courts to grant the bureau deference regarding its interpretation of federal consumer-financial law," he wrote.

He noted that the "heightened prudential supervision" Dodd-Frank authorizes the Fed to exercise over "systemically important" banks is effectively placing them under government control.

"Soon the Fed may exercise effective control over the largest insurance companies and asset managers as well," he wrote.

Hensarling contends that the law is gradually transforming America's largest financial institutions into functional utilities and taking the power to allocate capital away from the free market and adding it to the political establishment in Washington.

"Five years ago, House Republicans offered the Consumer Protection and Regulatory Enhancement Act as an alternative to Dodd-Frank. It sought to restore market discipline, end taxpayer bailouts and protect consumers with innovative, competitive markets polices for fraud and deception.

"It's time to revisit the ideas in a bill, offer new ones, and replace Dodd-Frank," Hensarling concluded.

© 2017 Newsmax. All rights reserved.

 
1Like our page
2Share
Politics
After five years on the books, the Dodd-Frank law has been a failure, destroying small banks, reducing access to credit, and creating conditions for financial instability, said Rep. Jeb Hensarling.
Hensarling, dodd frank, banks, regulation
485
2015-12-20
Monday, 20 Jul 2015 11:12 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved