Adam Johnson

Treasury Secretary Mnuchin Urges Repeal of Sec. 1071 of Dodd-Frank

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Posted by Adam Johnson on Monday, August 7th, 2017, 1:40 PM PERMALINK

In February of this year President Trump issued Executive Order 13772 which ordered the Department of the Treasury to develop a report relating to U.S. financial regulations and how to make existing regulation consistent with a framework of Core Principles set out by the Administration. In doing so President Trump sought to make the financial system work for everyday Americans.

Secretary Steven Mnuchin directed the Treasury to make suggestions within the Report that would drive the Treasury to become more in line with the set of Core Principles. One major conclusion reached within the Report was that Section 1071 of the 2010 Dodd-Frank Act should be repealed.

Section 1071 was passed as part of the 2010 Dodd-Frank Act and while the rule still has yet to be implemented, the Consumer Financial Protection Bureau (CFPB) under Director Richard Cordray has evidenced that a rulemaking will happen soon.

Section 1071 requires the CFPB to issue regulations that force financial institutions to collect and maintain data on consumers who apply for small business loans. Financial institutions are then required to report that data to the CFPB. Some of the data that is required to be collected includes the purpose of the loan, the race, sex, or ethnicity of the business owners, and if the businesses are minority or women-owned.

This regulation, while well intended, allows the CFPB to reach further into the private sector and would impose a new regime of unnecessary and burdensome costs that would hurt not only small financial institutions, but also financial consumers.

Section 1071 would increase borrowing costs for businesses, especially small ones, as the costs of compliance is passed through. Even though the CFPB’s reasoning for the rule is to prevent discriminatory lending practices, such practices are already against the law pursuant to the Equal Credit Opportunity Act (ECOA), as well as a plethora of state fair lending laws.

The U.S. House this past June passed the Financial CHOICE Act (H.R. 10), which included provisions that would prevent this harmful rule from ever being enacted. However the Financial CHOICE Act faces an uphill battle in the Senate and CFPB Director Richard Cordray has made it clear that the rule is going to be implemented. Secretary Mnuchin’s suggestion to repeal this costly and duplicative rule is imperative for small businesses, their owners and the health of America’s small lenders. Lawmakers in Congress should follow suit.

Photo Credit: Stephen Jaffe


ATR Supports S.J. Res. 47 to Repeal CFPB's Arbitration Rule

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Posted by Adam Johnson on Tuesday, August 1st, 2017, 10:20 AM PERMALINK

Americans for Tax Reform (ATR) President Grover Norquist this week sent a letter to Congressional lawmakers urging support for S.J. Res. 47 introduced by Senator Mike Crapo (R-ID).

S.J. Res. 47 would use the Congressional Review Act to block the Consumer Financial Protection Bureau’s (CFPB) rule relating to arbitration clauses.

Text of the letter is below and can be found here.

August 1, 2017

The Honorable Mitch McConnell           The Honorable John Cornyn       
Majority Leader                                       Majority Whip
317 Russell Senate Office Building         517 Hart Senate Office Building 
Washington, DC 20510                            Washington, DC 20510

The Honorable Mike Crapo
Chairman Senate Banking Committee
239 Dirksen Senate Office Building
Washington, DC 20510

Dear Majority Leader McConnell, Majority Whip Cornyn and Chairman Crapo:

On behalf of Americans for Tax Reform (ATR) I write to express ATR’s strong support for using the Congressional Review Act (CRA) to reverse the Consumer Financial Protection Bureau’s (CFPB) recently published rule relating to arbitration agreements.

The CFPB’s arbitration rule would do little in the way of benefiting American consumers, and instead would result in a flood of class-action lawsuits putting more money in the pockets of trial lawyers. The arbitration rule would cost consumers billions and lead to a projected 6,000 class action lawsuits every five years.

According to the CFPB’s own study, average payouts to consumers after litigation was less than $2.00 per person, which is significantly lower that the amount awarded during the arbitration process. The same study found that only 20 percent of class-action lawsuits are approved and among those the average wait time for a settlement was roughly three years. This is compared to the arbitration process where the wait time is an average of only 6.9 months.

I urge you and your colleagues in Congress to support S.J. Res. 47 introduced by Senator Mike Crapo (R-ID), which would use the authority granted under the Congressional Review Act to reverse the CFPB’s arbitration rule.

Sincerely,

Grover G. Norquist
President
Americans for Tax Reform 

Photo Credit: Geoff Livingston


ATR Supports H.J. Res. 111 to Repeal CFPB's Arbitration Rule

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Posted by Adam Johnson on Monday, July 24th, 2017, 3:52 PM PERMALINK

Americans for Tax Reform (ATR) President Grover Norquist this week sent a letter to Congressional lawmakers urging support for H.J. Res. 111 introduced by Representative Keith Rothfus (R-Penn.).

H.J. Res. 111 would use the Congressional Review Act to block the Consumer Financial Protection Bureau’s (CFPB) rule relating to arbitration clauses, published by the Bureau this month.

Text of the letter is below and can be found here.

July 24, 2017

The Honorable Paul Ryan
Speaker
U.S. House of Representatives
Washington, DC 20515

The Honorable Kevin McCarthy
Majority Leader
U.S. House of Representatives
Washington, DC 20515

Dear Speaker Ryan and Majority Leader McCarthy:

On behalf of Americans for Tax Reform (ATR) I write to express ATR’s strong support for using the Congressional Review Act (CRA) to reverse the Consumer Financial Protection Bureau’s (CFPB) recently published rule relating to arbitration agreements.

The CFPB’s arbitration rule would do little in the way of benefiting American consumers, and instead would result in a flood of class-action lawsuits putting more money in the pockets of trial lawyers. The arbitration rule would cost consumers billions and lead to a projected 6,000 class action lawsuits every five years.

According to the CFPB’s own study, average payouts to consumers after litigation was less than $2.00 per person, which is significantly lower that the amount awarded during the arbitration process. The same study found that only 20 percent of class-action lawsuits are approved and among those the average wait time for a settlement was roughly three years. This is compared to the arbitration process where the wait time is an average of only 6.9 months.

I urge you and your colleagues in Congress to support H.J. Res. 111 introduced by Representative Keith Rothfus (R-Penn.), which would use the authority granted under the Congressional Review Act to reverse the CFPB’s arbitration rule.

Sincerely,

Grover G. Norquist
President
Americans for Tax Reform 

 

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CFPB Arbitration Rule A Boon for Trial Lawyers, Not Consumers

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Posted by Adam Johnson on Tuesday, July 11th, 2017, 1:36 PM PERMALINK

This week the Consumer Financial Protection Bureau (CFPB) issued a new rule that prevents certain financial firms from using clauses in agreements with consumers, known as arbitration clauses, to stop litigation complaints. Some of these arbitration clauses require complainants to undergo mediated arbitration with these companies instead of class-action lawsuits. The new rule also requires companies to pay correspondence fees if their arbitration administrators do not pay the full amount of financial settlements.

This rule was not confirmed or enacted by any group of elected officials, it was agreed upon by a small group of political bureaucrats appointed by former President Obama. This is one of many regulations that the bloated Obama-era CFPB has imposed on the financial sector. It is an overreach by the government and while it is a burden on financial companies, it is extremely harmful to the consumer.

It may seem as if by allowing consumers to enter class-action lawsuits with these financial companies and banks they would have a better chance to right the wrongs of alleged fraud and abuse. This could not be further from the truth.

The arbitration clauses that the CFPB and the Director, Richard Cordray, claim are making it “impossible” for consumers to seek proportional compensation and restitution are actually a benefit to American consumers. Within these clauses it allows for settlements to be made that on average award more money than litigation would.

In their own study, the CFPB even confirms that typically payouts to consumers after litigation was less than $2.00 a person, which is significantly lower than the amount awarded during the arbitration process. In the same study, it states that only 20 percent of class-action lawsuits are approved and among those the average wait time for a settlement is around 3 years. This is compared to the arbitration process where the wait time is only 6.9 months.

By issuing this rule, the CFPB forces consumers to forego the less stressful and more beneficial process of arbitration. These unchecked and unnecessary regulations do not help consumers, but are a boon for trial attorneys.

The CFPB claims this new rule will help consumers, but like most of the regulations and rules it churns out, it puts an even larger chokehold on Americans under the guise of protecting them.

 

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ATR Applauds DOI’s Efforts to Improve Energy Access on Federal Lands

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Posted by Adam Johnson on Friday, July 7th, 2017, 2:02 PM PERMALINK

This week Secretary of the Interior Ryan Zinke issued a secretarial order to address the disastrous wait time and inefficiencies plaguing the process for receiving permits to produce oil and natural gas on federal land. In 2106 Applications for Permits to Drill (APD) took on average 257 days to process despite the fact that the Department of Interior (DOI) and the Bureau of Land Management (BLM) are statutorily required to process APD requests within 30 days. 

The order issued by Secretary Zinke is a positive step to improve the wait time for APDs and increase support to the offices of the Bureau of Land Management to create more efficiency in the system.

Due to these increased wait times on APDs and the lease sales, oil and natural gas production on federal lands has trekked downwards. During his eight years in office former President Obama repeatedly claimed natural gas production in the U.S. was the highest in the world and surged under his Presidency. 

However, he would be sorely wrong on that issue. During Obamas tenure natural gas production on federal lands saw a 27% decrease in total with an additional 20% decrease in leased acreage. This is not a sign of a “surge” or good natural gas production, this is a loss of jobs, higher energy costs, and pots increases in energy dependence on other countries’ oil and natural gas.

Secretary Zinke’s order is one that could change this for everyday Americans looking for good paying jobs and affordable energy costs that would in turn decrease not just for businesses, but also consumers. 

This news is encouraging to since it shows that this administration, not like its predecessor, is serious about government efficiency and streamlining burdensome red tape that restricts job creation and energy independence.

 

Photo Credit: Gage Skidmore

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Treasury Report Lays Plans for Financial Regulatory Reform

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Posted by Adam Johnson on Friday, June 23rd, 2017, 9:15 AM PERMALINK

President Donald Trump signed Executive Order 13772 on February 2, 2017 in order to lay out core principles for regulators when creating regulations within the U.S. financial system. This order was an important step to streamlining the overly burdensome regulatory regime that has plagued the economic recovery after the Great Recession.

The Core Principles that President Trump listed out in the Executive Order are as follows:

  1. Empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth;
  2. Prevent taxpayer-funded bailouts;
  3. Foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry;
  4. Enable American companies to be competitive with foreign firms in domestic and foreign markets;
  5. Advance American interests in international financial regulatory negotiations and meetings;
  6. Make regulation efficient, effective, and appropriately tailored; and
  7. Restore public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework.


Within the order, President Trump requested the Secretary of Treasury, Steven Mnuchin, to give a report to the President on the extent to which current regulations, laws, guidance, and more, promote the Core Principles or inhibit them, along with subsequent reports.

This June Secretary Mnuchin released the first of many reports on the financial system’s regulatory burdens. The report covered the U.S. depository sector, which includes banks, savings associations, and credit unions. The Secretary mentions that it is of critical importance for banking regulation to align with the Core Principles. Therefore, the Secretary’s report lists out nine recommendations for regulatory reform within the depository system:

Addressing the U.S. Regulatory Structure: The current structure within the U.S. regulatory system is filled with duplication, overlap, and fragmentation, which can lead to ambiguity and repetitive regulations. This report suggests a number of changes to the function and structure of regulatory agencies in order to have greater coordination and to avoid regulatory overlap.

Refining Capital, Liquidity, and Leverage Standards: There is a heavy burden created by Dodd-Frank on banks when it comes to statutory stress testing. This report suggests raising the threshold of what is considered to be a big bank in order to ease these burdens.

Providing Credit to Fund Consumers and Businesses to Drive Economic Growth: The current regulatory burden has contributed to limited credit being passed onto consumers, which inhibits economic growth. The Treasury recommends increasing banks’ capacities to lend and their abilities to design and deliver lending products while maintaining safety standards.

Improving Market Liquidity: The many regulations implemented through Dodd-Frank have been limiting market liquidity within the banking system. By enacting significant changes to these regulations, including the Volcker Rule, the report suggests that it would support economic growth, avoid systemic risk, and minimize the risk of a taxpayer-bailout.

Allowing Community Banks and Credit Unions to Thrive: Ever since Dodd-Frank law was signed into law, community banks and credit unions have been burdened significantly with an average of one institution being shuttered daily. The report suggests exempting banks with assets under $10 billion from a number of regulatory provisions in order to ease this burden.

Advancing American Interests and Global Competitiveness: Many international regulatory standards create an unfriendly environment for banks of any size and form within the U.S. The Treasury suggests that all international standards imposed on U.S. banking agencies be reviewed in order to minimize negative economic consequences.

Improving the Regulatory Engagement Model:  With a lack of coordination and communication between governmental agencies and boards of banking organizations, there has been a decrease in effectiveness of regulations. A greater degree of inter-agency cooperation with themselves and boards of directors would allow for more transparency and accountability.

Enhancing Use of Regulatory Cost-Benefit Analysis: While Congress has imposed strict cost-benefit analysis requirements on regulatory agencies, the requirements are not uniform and consistent among the different agencies. Therefore, by adopting a more consistent and transparent cost-benefit analysis of regulations, there will be less confusion within the banking system.

Encouraging Foreign Investment in the U.S. Banking System: Foreign direct investment is an excellent way to diversify risk and expand economic growth. The report suggests increasing these investments in order to broaden international corporate investment in our banking system.

Photo Credit: Stephen Jaffe

 

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EPA Admin Scott Pruitt Targets Clean Power Plan for Rollback

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Posted by Adam Johnson on Tuesday, June 20th, 2017, 10:09 AM PERMALINK

Unveiled under former President Obama and billed as one of the Obama EPA’s signature achievements, the Clean Power Plan (CPP) is a regulatory behemoth that threatens not just affordable energy in the U.S. but state sovereignty and economic growth. Yet current EPA Administrator Scott Pruitt and President Trump are fighting to neutralize the threat of this top-down, one size fits all regulatory regime and are working to remove the rule before any widespread harm is realized.

On February 9, 2016 the U.S. Supreme Court issued a stay of the rule, as many businesses and state officials challenging the rule alleged the CPP was ambiguous and overly broad. Therefore, until all of the legal challenges have been played out, the CPP cannot be enacted.

Just over a year later, President Trump signed an executive order directing EPA Administrator Pruitt to look at the rule and examine how it can be changed or repealed. Both Administrator Pruitt and President Trump have now put forth a new rulemaking to rescind the rule and have sent it to the Office of Management and Budget (OMB) for review. Following OMB review, the new rulemaking will be published for public comment.

If the CPP were to be enacted, it would cause numerous negative economic impacts that will affect not just states, but also businesses and consumers alike. It has been projected that the CPP would cause a 12 to 17 percent increase in prices of electricity. In this estimate, every single state within the continental United States would see an increase in rates and 44 of them would see double digit increases.

Along with the increase in rates, the CPP would decrease household spending power by $64-79 billion and the annual compliance costs would be upwards of $73 billion. With these costs, the CPP is regressive in that it disproportionally hurts low-to-middle income Americans by reducing household incomes, forcing them out of jobs, and hiking the cost of energy.  

Thankfully President Trump and Administrator Pruitt have taken up the fight against this unnecessary federal overreach by the EPA. As Administrator Pruitt has stated regarding the plans to repeal the CPP, “The days of coercive federalism are over.”

 

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House Passes Financial CHOICE Act to Reform Dodd-Frank Regulatory Burden

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Posted by Adam Johnson on Monday, June 12th, 2017, 10:12 AM PERMALINK

Last week the full U.S. House of Representatives voted 233-186 to pass Representative Jeb Hensarling’s (R-Texas) Financial CHOICE Act (H.R. 10) to reform the regulatory burden and cost to taxpayers enacted by the 2010 Dodd-Frank law. The Financial CHOICE Act allows for more consumer protections and a freer market for smaller banks, which could not compete against the bigger banks with numerous amounts of red tape established by the 2010 law.

Dodd-Frank was a signed into law by former President Obama to “rein in Wall Street” after the 2007-08 financial crisis. However, as typical of sweeping regulatory legislation, Dodd-Frank ended up benefiting large banks and only served to hurt community banks, credit unions, and the consumers in general.

The law enshrines “too big to fail” institutions through the Finance Stability Oversight Council (FSOC) and the concept of Orderly Liquidation Authority (OLA), which allows the government to continue the use of bailouts with taxpayer money. It also created an independent agency called the Consumer Financial Protection Bureau (CFPB). This agency is completely unaccountable to Congress and the Director of the CFPB is a political appointee, therefore he cannot be fired by the President without an extensive showing of cause.

In total, the Dodd-Frank Act has imposed over $36 billion in costs along with 73 million hours of paperwork. According to the American Action Forum (AAF), these costs amount to approximately $112 per American taxpayer and over $300 per household.

Thankfully, the Financial CHOICE Act makes significant reforms including:

FSOC and OLA Reforms: The Act repeals the Federal Deposit Insurance Corporation’s (FDIC) authority over orderly liquidation, which grants the FDIC authority to bailout institutions. Also, it repeals the authority of the FSOC to designate banks as systematically important financial institutions and puts in place new bankruptcy procedures.

CFPB Reforms: This unaccountable agency undergoes substantial changes in the new bill. The name is changed to the Consumer Law Enforcement Agency and restructures the agency as an Executive Branch agency with a Director removable by the President at will. Along with the structural changes, the Act would repeal the CFPB’s authority to arbitrarily designate any “act or practice” by the banking industry as unfair or abusive.

Fiduciary Rule Repeal: The Department of Labor’s Fiduciary Rule imposes heightened standard on certain financial professionals who deal with retirement planning or advice. It is estimated under the new standard that 7 million IRA holders could be disqualified from investment advice, and the number of IRAs opened annually would fall by up to 400,000. Under the CHOICE Act, this burdensome rule would be repealed.

Volcker Rule Repeal: Originally enacted under Dodd-Frank, the Volcker Rule limits the type of trading activities banks can engage in, specifically as it relates to proprietary trading. As a result, U.S. financial institutions have become less competitive globally while the cost of raising capital has increased. Recent, former Federal Reserve Chairman Paul Volcker (the provisions namesake) has acknowledged proprietary trading did not lead to the financial crisis, calling the justification for the rule into question. The Financial CHOICE Act also repeals this stranglehold on U.S. financial institutions.

Overall, the Financial CHOICE Act is a great first step to the reform that is needed for Dodd-Frank and banking regulations. Now that it has passed the House, the Senate should take up the measure in order to begin making that step to relieving banks and the American people from unnecessary, harmful, and burdensome regulations.

 

Photo Credit: Gage Skidmore

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Financial CHOICE Act Reigns in Dodd-Frank Regulatory Burden

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Posted by Adam Johnson on Thursday, June 8th, 2017, 9:24 AM PERMALINK

The Great Recession of 2007-08 was the worst economic crisis the U.S. had seen since the Great Depression. In response, the Democratic Congress hastily and absent-mindedly passed a financial regulatory behemoth known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, and on July 21, 2010 former President Obama signed it into law.

While the Dodd-Frank Act was supposed to target “Wall Street” the law instead has imposed burdensome regulations and costs on small financial institutions, consumers, and taxpayers. Here are a few ways Dodd-Frank slowed down economic recovery, increased government intervention into the market, and pushed the financial sector nearer to stagnation:

  1.  Enshrining “Too Big to Fail”. In the Dodd-Frank Act, a new agency was created called the Financial Stability Oversight Council (FSOC), which was made in order to determine when financial institutions become Significantly Important Financial Institutions (SIFI). By allowing the government to designate banks as “significantly important”, Dodd-Frank permits the use of bank bailouts with taxpayer money and ironically enshrines “Too big to fail.”
  2. The Consumer Financial Protection Bureau. The Dodd-Frank Act also created this independent and unaccountable agency. Since it is independent, it does not have any Congressional oversight and its executive is a political appointee, therefore he cannot be fired except by the President and only upon a showing of cause. It also has the power to ban bank products that it arbitrarily deems as “abusive”, which gives the government the ability to control what products banks may provide to their customers.
  3. The Crushing Dodd-Frank Compliance Burden and Costs. In total, the Dodd-Frank law has cost imposed over $36 billion in costs along with 73 million hours of paperwork. According to the American Action Forum (AAF), these costs amount to approximately $112 per American taxpayer and over $300 per household. AAF also found that according to agency calculations, it would take 36,950 employees working full time (2,000 hours annually) to complete a single years worth of Dodd-Frank Act paperwork.

Dodd-Frank has created a new era of government regulations meant to stymie the growth of the American economy. This law has not only imposed harm on small banks and credits unions on Main Street, but also consumers and American competitiveness as whole.

Thankfully there is legislation in the U.S. House sponsored by House Financial Services Committee Chairman Jeb Hensarling (R-Texas) called the Financial CHOICE Act, which repeals many of the harmful regulations proffered by the legislative disaster that is Dodd-Frank, while also providing relief to small financial institutions that are the country’s engine of economic growth.

The Financial CHOICE Act enables more competition and consumer protection within the financial services industry and will increase growth in a responsible manner. As the full House this week is set to vote on the Financial CHOICE Act, lawmakers should offer support for what will be one of the biggest steps forward in reigning in the regulatory regime that resulted from the Dodd-Frank Act. 

 

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Show Notes: Withdrawal from Paris Climate Agreement Benefits American Workers

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Posted by Adam Johnson on Tuesday, June 6th, 2017, 11:14 AM PERMALINK

On today’s episode of The Grover Norquist Show, Grover interviews ATR energy expert Justin Sykes about President Trump’s withdrawal from the costly and burdensome Paris Climate Accord. The Paris Accord  is a misguided product of the Obama Administration which would have increased costs to taxpayers, created new and unnecessary regulations on the energy market, and would have had negligible effects on the global climate. 

The Accord would have also put the U.S. at a large disadvantage to countries like China and India which would have been allowed to continue and increase current emissions levels for well over a decade before any reductions. 

Additionally, as part of the Paris Accord President Obama previously pledged to send billions in taxpayer dollars overseas to developing countries. Billions of taxpayer dollars have already been wasted on foreign handouts, none of which will remotely benefit American taxpayers.  As President Trump might say, the Paris Climate Accord was simply a "bad deal" for American taxpayers, consumers, and businesses.

President Trump made good on his campaign promise and his announcement of withdrawal from Paris will benefit American workers, taxpayers, and the U.S. economy.

 

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