Thanks to Dodd-Frank, The Dreamers Are Being Suffocated
Every successful company in our nation started as a small enterprise on a Main Street somewhere in America. Take Remington Arms and Chobani as examples: two local companies that today are among the most successful large corporations in the country. The key to driving their success was the ability to start small and scale big. Under Dodd-Frank, too many Americans with the drive and passion to create and innovate haven’t had the opportunity to turn the outlines of their dreams into concrete realities.
In 2010, the Dodd-Frank Act was passed by Democrats in Washington as a response to the worst financial crisis in 80 years. Washington liberals promised that this sweeping legislation would usher in a stronger economy with a fairer regulatory structure.
However, Dodd-Frank has failed to grow our economy or protect consumers. Increasingly, the law has made it harder for the little guy to get ahead. Since Dodd-Frank was signed into law, $36 billion in regulatory fees have been imposed on our economy. Now, community banks are forced to hire armies of costly compliance officers to keep up with Dodd-Frank’s complex, onerous regulations, leading to reduced services and increased costs for consumers. Before Dodd-Frank, 75 percent of all banks offered free checking, by 2016 that number shrunk to only 38 percent.
What began as 2,000 pages of complex regulations has grown to over 25,000 pages of crippling, overlapping rules that have made big banks bigger, while driving community financial institutions in our area and across the nation to near extinction. Under Dodd-Frank, America has lost, on average, one community financial institution each day.
Meanwhile, hardworking taxpayers have seen their paychecks stagnate, with little to no real wage growth in most industries. Mortgages have grown increasingly expensive and small business owners are unable to access the capital they need to grow their businesses and create jobs. Personal savings rates have declined from 6.1 to 5.2 percent and the median household income has fallen 3 percent.
To create a stable, resilient economy, Republicans on the House Financial Services Committee introduced the Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs (CHOICE) Act. The Financial CHOICE Act will eliminate Dodd-Frank’s flawed approach to regulation and replace it with commonsense reforms to protect consumers, put an end to taxpayer funded bailouts and level the playing field. Wall Street will be held accountable with the toughest penalties in history for fraud and deception.
First, to create a level playing field the Financial CHOICE Act unleashes small banks and community lending institutions by streamlining the regulatory process and repealing some of the most burdensome and costly aspects of Dodd-Frank. Under Dodd-Frank, average fees for checking accounts have risen 21 percent while more than 80 percent of banks have reported an increase in compliance costs. Additionally, 50 percent of small business owners reported that they were unable to access the capital they need to grow their business. With the Financial CHOICE Act, community-lending institutions will once again be able to offer services they have been forced to eliminate throughout the past seven years, including residential mortgages, small businesses loans and free checking.
Second, to protect consumers from Washington overreach, the Financial CHOICE Act restructures the unconstitutional Consumer Financial Protection Bureau. Created by Democrats and given the authority to act without Congressional oversight, the CFPB is effectively the most powerful, unaccountable agency in U.S. history. Under the CFPB’s watch, consumer costs have increased while access to services has decreased. The CFPB has made credit increasingly difficult to access and outright unaffordable for those who need it the most, contributing to the reduction of nearly 85 million credit card accounts. Additionally, the CFPB has attempted to change the $905 billion auto loan market with a faulty set of guidance that both Republicans and Democrats agree should be repealed. This flawed guidance by the CFPB will lead to higher interest rates for consumers, in some cases up to $600 on the life of the loan.
Next, the Financial CHOICE Act ends tax-payer funded big bank bailouts by holding failing financial institutions accountable through bankruptcy, not bailouts. As long as Dodd-Frank’s bailout fund is law, ‘too big to fail’ institutions can practice all the risky behavior they want, knowing full well that you and I are right there as taxpayers to pick up the tab for their recklessness. Holding these big banks accountable and requiring them to be strongly capitalized will make them less susceptible to failure, laying the groundwork for a more stable financial system that can support a robust economy. The Congressional Budget Office reported that ending this practice will save the taxpayers nearly $30 billion.
Republicans, thankfully, have a better way. The Financial CHOICE Act will simplify the financial regulatory structure and close loopholes to ensure that the system isn’t abused by the well-connected and powerful. Our plan will hold both Wall Street and Washington accountable with the toughest penalties in history, ensuring that our economy can grow from Main Street up, not Wall Street down. This is the American way.