When the financial reform legislation known as Dodd-Frank was enacted more than six years ago, President Obama and Democrats in Congress promised the American people that this law would “lift the economy,” that their hard-earned money would be safer, financial markets would be more stable, and that no one institution would threaten the soundness of the global financial system. As we’ve seen this go into effect, that bill of goods sold to the American people has turned out to be full of lies.
Because for most Americans, the costs of doing business have gone up, while benefits have gone down. Mortgages have been harder to obtain. Recall that your local banks likely used to offer free checking, and that getting a loan to open a new small business used to be a normal function in pursuing the American dream. Not anymore.
And what about “too big to fail” institutions? It’s reasonable to think that major banking legislation would have mitigated such an obvious and massive risk to our economy. Alas, Dodd-Frank missed the mark again. Even ultra-liberal, Democrat Senator Elizabeth Warren admits that Dodd-Frank has not ended the risk of “too big to fail.” Far from it, Dodd-Frank built a moat around TBTF institutions and simultaneously made it harder for small community banks to keep their doors open.
In large part, the 2008 global financial crisis was a result of federal financial regulators failing to do their jobs in the first place, coupled with a failure to anticipate the looming issues in the subprime mortgage market. What did Dodd-Frank do? It rewarded regulators’ incompetence with more responsibility, and it built a moat around “too big to fail institutions,” while making it difficult for small banks to stay afloat — to say nothing of the untold damage it has done to our economy. The law of unintended consequences has never been more apparent than when we look at Dodd-Frank.
Another product of Dodd-Frank is the Consumer Financial Protection Bureau, which is arguably the most unaccountable agency in the entire federal government. Its structure was recently determined to be unconstitutional by the U.S. Circuit Court of Appeals because its Director does not have to answer to the President of the United States. Yet in a recent hearing, Director Richard Cordray could not admit to me if his appointment was constitutional or not. Additionally, the CFPB is fed money directly from the federal reserve, making its spending completely unaccountable to the American people via their elected representatives in Congress. This is unacceptable.
Next week, the House will vote on legislation that will make the reforms that Dodd-Frank failed to deliver.
The Financial CHOICE Act will finally put an end to “too big to fail” for financial institutions, as American taxpayers are faced with too much burden as it is. There will be bankruptcy- not bailouts by American taxpayers – for firms that fail.
While President Obama’s own Small Business Administration director admitted that Dodd-Frank has hurt small banks’ ability to offer small business loans, CHOICE will eliminate unnecessary regulations on our community banks. That way, entrepreneurs will once again be able to start or expand their business with confidence. CHOICE will also empower community banks to once again help our families get the mortgage that best suits them, not one that’s dictated by Washington.
We will also rein in the insidious CFPB. The American people deserve a federal government that is transparent and accountable, not one with a blank check and boundless authority.
For eight years, President Obama and Democrats in Congress told the American people that there was a ceiling on success and that the American Dream was no more – that more rules and regulations schemed by faceless bureaucrats in Washington was the only path ahead, and that to make it in America we needed THEM, liberal Democrat politicians, instead of our own ingenuity, hard work, and optimism. But November’s election showed that the American people reject this “government-knows-best” dogma, and that We the People should be empowered to make financial decisions for our families.
As a father of eight children, there is nothing more important to me than ensuring the next generation will have the opportunity to pursue their own American Dream. But our kids will only thrive if there is an economy that is built on sound economic principles and smart regulation. They can’t bear the burden of Dodd-Frank’s negative consequences. That’s why we need the Financial CHOICE Act.
Last Update: Jun 01, 2017 12:40 pm CDT
