Justin Sykes

ATR Statement on Obama's Offshore Ban

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Posted by Justin Sykes on Thursday, December 22nd, 2016, 11:31 AM PERMALINK

Washington – ATR President Grover Norquist issued the following statement this week in response to President Obama’s announcement that he will indefinitely ban new oil and gas offshore drilling leases in vast areas of the Arctic and Atlantic oceans:

“President Obama’s announcement this week that he will ban oil and gas drilling leases in large parts of the Arctic and Atlantic oceans is an unprecedented and ideologically driven move to appease far left environmentalists undertaken in the waning hours of his administration.   

“Obama’s move to ban oil and gas drilling chokes off the vast economic potential these areas would offer the American economy through increased energy production and the creation of good paying jobs. In the Arctic alone, these areas are estimated to hold 27 billion barrels of oil and over 130 trillion cubic feet of natural gas.

“Obama’s actions are all too typical of a president concerned only with ‘green’ vanity at the expense of American prosperity. ATR looks forward to working with President-elect Trump to undo this and a number of other economically disastrous policies put forth under the Obama administration.”  

 

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Toomey Targets Dodd-Frank with Reconciliation

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Posted by Justin Sykes on Friday, December 9th, 2016, 3:22 PM PERMALINK

This week Senator Pat Toomey (R-Penn.) called on the Senate to begin reforming the Dodd-Frank Act through a legislative procedure known as reconciliation. Senator Toomey’s call to rein in Dodd-Frank through reconciliation is a positive step toward protecting taxpayers, consumers, and U.S. businesses from the crushing and burdensome tangle of regulations that is Dodd-Frank.

Speaking on the Senate floor, Senator Toomey stated:

“For too long now we’ve been putting up with a Dodd-Frank bill that is costing us a lot of economic growth and opportunity. I am hoping our Democratic colleagues will work with us so that we can begin to make the constructive changes that we need. But if not, I think we should use all tools available to get this job done.”

One of tools available that Senator Toomey suggested is a process known as reconciliation. By using the reconciliation process, lawmakers could make legislative changes to the Dodd-Frank Act with a simple majority in the Senate. Since Senate Republicans will occupy 52 seats in the Upper Chamber next year, this would allow them to make changes to the law and prevent Senate Democrats from filibustering those efforts.

Senator Toomey has also made it clear one of the first targets of reform will be the Consumer Financial Protection Bureau (CFPB), an independent agency created by the Dodd-Frank Act. Created less than six years ago, the CFPB has developed into a regulatory monster issuing nearly 50 rules at a rate 3.5 times faster than any other government agency.

The CFPB is currently not subject to the Congressional appropriations process, and “their funding makes them completely unaccountable to anyone other than themselves,” Senator Toomey said.

His fellow Republican colleagues in the Senate echoed the sentiments expressed by Toomey this week regarding Dodd-Frank reforms. Chairman of the Senate Baking Committee Richard Shelby (R-Alaska) stated Wednesday, “I’d like to repeal the whole thing, period.”

Dodd-Frank reforms are also receiving increased attention on the House side as well. House Financial Services Committee Chairman Jeb Hensarling (R-Texas) this year introduced the Financial CHOICE Act to overhaul Dodd-Frank, an effort that will see a reenergized push in 2017 with Republicans controlling both the legislative and executive branches.  

Photo credit: Gage Skidmore

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Mnuchin: Dodd-Frank Reform “Number One Priority”

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Posted by Justin Sykes on Thursday, December 1st, 2016, 2:23 PM PERMALINK

It was announced Wednesday that President-elect Donald Trump has tapped Steven Mnunchin, formally with Goldman Sachs, to the lead the Treasury. Following the announcement, Mnuchin wasted no time laying out his general priorities for financial services reforms in 2017, which included reforming the Dodd-Frank Act and the Volcker Rule in particular, easing the burden on regional banks, and potentially returning Fannie Mae and Freddie Mac to private control. 

Appearing on CNBC’s “Squawk Box” Wednesday, Mnunchin expressed intentions to target the costly and burdensome Dodd-Frank Act, stating:

“The number one problem with Dodd-Frank is it’s way to complicated and it cuts back lending, so we want to strip back parts of Dodd-Frank that prevent banks from lending and that will be the number one priority on the regulatory side.”

Since enactment over six years ago, the Dodd-Frank Act has unleashed a slew of costly and burdensome regulations that have forced many community banks out of the market, chilled small business lending, and general reduced American financial competitiveness, among other problems.

Mnuchin will be in good company for prioritizing Dodd-Frank reform next year, as President-elect Trump has already vowed to “dismantle Dodd-Frank” and freeze or scrap other financial regulations such as the Department of Labor’s Fiduciary Rule.

President Trump and Mnuchin will have their work cut out for them somewhat, as House Financial Services Committee Chairman Jeb Hensarling has laid out a financial reform blueprint with the Financial CHOICE Act he introduced this year.

Hernsarling’s CHOICE Act looks to repeal burdensome regulations such as the Volcker Rule and Durbin Amendment, and rein in out of control regulators such as the Consumer Financial Protection Bureau and Financial Stability Oversight Council, in addition to a number of other reforms.  

 

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ATR Statement on EPA’s Newly Released Fuel Economy Standards


Posted by Justin Sykes on Wednesday, November 30th, 2016, 5:45 PM PERMALINK

Washington – ATR President Grover Norquist issued the following statement this week in response to the EPA’s unprecedented push to finalize strict new fuel-economy standards for 2022-2025:
 

“The EPA’s push this week to finalize burdensome and costly new fuel-economy standards is clearly an affront to the incoming Trump administration. The EPA’s actions disregard the appropriate and in-depth analysis needed to ensure that the new standards take into account fuel efficiency, affordability, and the impact on the economy.  
 

“The overly strict standards proposed by the EPA will only make cars and trucks increasingly more expensive and unaffordable for American consumers. As a result, American families and workers will be forced to look to less efficient and less safe used cars and trucks.
 

“Such stringent and premature standards are unrealistic, and effectively put the government in between consumer choice and American mobility.”   


Top 5 Financial Regulations Trump Should Repeal

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Posted by Justin Sykes on Monday, November 28th, 2016, 2:57 PM PERMALINK

Throughout his campaign Donald Trump pledged to repeal and “dismantle” burdensome financial regulations such as the Department of Labor’s (DOL) “fiduciary rule” and regulations enacted under the Dodd-Frank Act. Now that President-elect Trump has clinched the Whitehouse and has the backing of a Republican House and Senate, he now has the ability to act on his campaign pledge.                                                   

Looking ahead to 2017, there are five financial reforms that Trump can undertake to relieve the burdensome and costly regulatory impact left over from the Obama administration.

  1. Repeal the DOL’s Fiduciary Rule. Trump should look to repeal the DOL’s costly fiduciary rule before it takes effect April 2017. The massive rule spans over 1000 pages and reduces the ability of financial advisors to give advice to IRA and 401(k) holders. Estimates show the fiduciary rule could disqualify up to 7 million IRA holders from investment advice, and reduce the number of IRAs opened annually by up to 400,000.
  2. Repeal the Durbin Amendment. The Durbin Amendment, passed as part of the Dodd-Frank Act, requires the Federal Reserve to fix the price of fees charged to retailers for debit card processing. Prior to Dodd-Frank, issuers of debit cards received a fee from the merchant to offset the cost of running the debit card system. This has increased the cost of accepting debit cards for many small businesses, which in turn pass those costs onto consumers.
  3. Repeal the Volcker Rule. Passed as part of the Dodd-Frank Act, the Volcker Rule, named for former Federal Reserve Chairman Paul Volcker, limits the type of trading activities that banks can engage in, specifically proprietary trading (trading for ones own accounts). Volcker has since acknowledged however proprietary trading did not lead to the financial crisis, calling the justification behind the rule into question. As a result, U.S. financial institutions have become less competitive globally, the cost of raising capital for small businesses has increased, and market liquidity has been reduced. 
  4. Stop or repeal the Arbitration Rule. The CFPB is currently racing to finalize the proposed Arbitration Rule before President Trump takes office in January. The proposed rule would ban arbitration clauses in consumer finance contracts such as those used by lenders and credit card companies. The rule would be a boon for trial attorneys and a burden for consumers. The CFPB’s own study found arbitration clauses result in better outcomes for consumers, with awards being given in a matter of months, while class-action awards take years and have average payouts of less than $2 per person.  
  5. Reform the CFPB. The Consumer Financial Protection Bureau (CFPB) is the fastest rulemaking body in the federal government. Of the nearly 50 rules the CFPB has imposed, 26 of them have directly resulted in $2.8 billion in costs and 16.9 million hours of increased paperwork.  Two primary CFPB reforms Trump can focus on are subjecting the bureau to Congressional oversight and shifting CFPB leadership from one unaccountable bureaucrat to a 5-member board. 

 

Photo Credit: Gage Skidmore 

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Trump Should Kill DOL Fiduciary Rule

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Posted by Justin Sykes on Thursday, November 17th, 2016, 11:49 AM PERMALINK

One of President-elect Trump’s goals for 2017 should be to kill the Department of Labor’s (DOL) rule for financial advisors, commonly referred to as the “Fiduciary Rule”. The rule spans over one thousand pages and will reduce the ability of financial advisors to give advice to IRA and 401(k) holders, essentially putting the federal government in between Americans and their retirement savings decisions.

Estimates show the fiduciary rule could disqualify up to 7 million IRA holders from investment advice, and potentially reduce the number of IRAs opened annually by between 300,000 and 400,000. 

The Trump administration could kill the rule in one of two ways. First, with a Republican controlled House and Senate, President Trump could look to do so by passing a bill that would effectively overturn the rule.

There has already been wide opposition to the rule expressed in both the House and Senate, with Representatives Phil Roe (R-Tenn.), Charles Boustany (R-La.) and Ann Wagner (R-Mo.) introducing a resolution earlier this year under the Congressional Review Act to block the rule. A similar resolution was introduced in the Senate by Senator Johnny Isakson (R-Ga.). 

Alternatively, Trump’s second option and more likely choice would be to roll back the fiduciary rule using a new rule-making process at the Labor Department. With new DOL leadership, the Trump administration could delay the rule indefinitely. This delay would allow DOL officials under Trump to reverse the fiduciary rule altogether. 

Whatever path President Trump might decide on, the need to kill the costly and burdensome fiduciary rule is huge. Killing the fiduciary rule before the April 10th 2017 implementation date would protect low-and-middle income families, small businesses, and employees from increased retirement savings costs and reduced access to investment advice.

 

Photo credit: Gage Skidmore 

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President Trump Plans to "Dismantle the Dodd-Frank Act"

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Posted by Justin Sykes on Thursday, November 10th, 2016, 2:08 PM PERMALINK

In a statement released today President-elect Donald Trump’s transition team made it clear that one of Trump’s first priorities will be dismantling the massive 2010 Dodd-Frank Act.

Trump has repeatedly criticized the Dodd-Frank Act for the economically disastrous impact it has had on the American economy, killing community banks, reducing access to credit, and increasing the regulatory burden on American businesses.

The statement issued on the Trump transition team website reads:

“The Dodd-Frank economy does not work for working people. Bureaucratic red tape and Washington mandates are not the answer. The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation."

Among some of the items President-elect Trump has set his sights on as it relates to the Dodd-Frank Act are ending the Volcker Rule and reining in and reforming the Consumer Financial Protection Bureau (CFPB).

The Trump team will have a legislative head start once they take office in January as House Financial Services Committee Chairman Jeb Hensarling (R-Texas) has already laid out a Dodd-Frank reform blueprint with his Financial CHOICE Act (H.R. 5983), which passed out of Committee recently.  

 

Photo credit: Gage Skidmore

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Tim Kaine Wants to Increase Dodd-Frank Burden on Main Street America

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Posted by Justin Sykes on Friday, October 21st, 2016, 12:04 PM PERMALINK

In a recent interview Democratic Vice Presidential Candidate Tim Kaine admitted that a Hillary Clinton White House would look to increase the burden of Dodd-Frank regulations in a misguided effort to help “Main Street”. The irony of Kaine’s plan is that small businesses on America’s Main Streets are already being crushed by Dodd-Frank regulations, and increasing such regulations will only serve to worsen the problem.  

Speaking on CNBC’s “Closing Bell” Kaine made it clear his goals are aligned with the far left liberal branch of the Democratic Party. Kaine praised Sen. Bernie Sanders (I-Vt.) and Sen. Elizabeth Warren (D- Mass.) saying both, “have really important ideas that they’ve put on the table.” Clearly Kaine and the Clinton campaign are grossly out of touch.

Kaine went on to say that “we’ve got to keep regulation…on Wall Street, so that Wall Street doesn’t tank Main Street again” and that, “we put Dodd-Frank in place for a reason, and we want to strengthen it.” However the fact is Dodd-Frank has done nothing to improve the economic health of small businesses and has instead reduced access to the credit and capital many on Main Street need to survive and grow.

It is no secret that new and small businesses play an outsized role in creating jobs and opportunities in the U.S. economy. Yet new reports show a massive decrease in new business growth in recent years, and that slow down has been a product of reduced borrowing opportunities for new and small businesses. 

For example, in 1980 firms in their first year accounted for 13 percent of all companies, but since 2010 that rate has fallen to around 8 percent. Similarly, in the 1990's the average new business hired over 7 workers, while in 2011 the average new business hired roughly 4 workers. Tim Kaine would clearly attribute this reduction to Hillary’s narrative of “Wall Street is crushing the little guy”, but such an argument is misplaced and simply political rhetoric.

The fact is two of the most disastrous results from Dodd-Frank that have impacted growth in small businesses are reduced access to credit due to community bank closures and consolidation, and an economically crushing regulatory burden. 

Community banks (those with less than $10 billion in assets) serve as a primary source of credit for many new and small businesses. According to a 2015 Small Business Credit Survey, small business loan applicants were successful 76 percent of the time at small banks, versus 58 percent of the time at large banks.

Yet since the passage of Dodd-Frank, such sources of credit for many on Main Street looking to start or grow small businesses have dried up. In fact, since Dodd-Frank was enacted, the number of community banks has shrunk by 14 percent. Thus it should come as no surprise that since 2008 small businesses have seen a 15 percent decrease in lending.

Thus the issue is why Tim Kaine and Hillary Clinton would want to “strengthen” Dodd-Frank in order to “help” Main Street. Clearly the resulting regulatory burden of Dodd-Frank has done nothing to help small businesses and instead has limited access to credit and inhibited economic growth on Main Streets across America. 

 

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Dodd-Frank is Crushing Small Businesses and Startups in America

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Posted by Justin Sykes, Johnathan Sargent on Thursday, October 20th, 2016, 2:47 PM PERMALINK

After 6 years, Dodd-Frank’s legacy is hindering American innovation. Since its passage, the Dodd-Frank Act has unleashed an onslaught of large and complex regulations. Because of these regulations the growth of American small businesses and startups has hit an all-time low. In a report by Third Way, these regulations are examined as a primary factor for this phenomenon.

The Third Way report found that while new businesses have played a historically large role in U.S. job creation, trends show that in recent years there has been a growing gap in borrowing opportunities for small businesses and startups. Contrast this with the fact that lending to large businesses has surged in recent years. Such trends can be tied to the fact that small banks are being forced to either consolidate or shutter their operations as a result of Dodd-Frank regulations.   

The impact of Dodd-Frank regulations on small businesses and startups begins with their effect on small banks, such as community banks. Dodd-Frank regulations have led to higher compliance costs, which are economically disastrous for smaller banks because they lack the vast resources that their larger competitors possess. According to a study by the Mercatus Center, 90 percent of banks stated that compliance costs have increased since 2010. The report by Third Way highlights that such community and small banks “bear a disproportionate regulatory burden.”

Because of these increased compliance costs, small banks are reducing the number of services that they provide. It is also the case that as community banks close due to skyrocketing compliance costs and other regulatory factors, sources of credit for small businesses are simply no longer available. This has led to a decrease in small business lending in the U.S.

For instance, since 2008 lending to small businesses has decreased by 15%, while lending to big businesses has increased by 35%. According to a 2015 Small Business Credit Survey, small business applicants were successful 76% of the time at small banks, versus 58% of the time at large banks. Thus as community banks close or consolidate, small business lending dries up. 

Small businesses are then left with no other option than to seek loans from lager banks, which cannot provide the same level of personalized service and competitive rates that community and small banks can provide. Ironically, as a result of Dodd-Frank, many large banks have also been forced to eliminate loans that after the financial crisis would be seen as too “risky”. For the most part, this means eliminating loans to businesses with less than $2 million in revenue, or alternatively eliminating loans less than $100,000 altogether.

This lack of access to credit has led to a reduction in the amount of startup firms in the U.S. In 1980, firms in their first year accounted for 13% of all companies, yet since 2010 that rate has dropped to roughly 8%. According to a 2015 survey by Federal Reserve banks, small businesses and startups are finding it increasingly difficult to obtain needed credit. The survey found that 63% of microbusinesses (firms with annual revenue under $100,000) and 58% of startups (firms less than two years old) were unable to realize their funding needs.

It is apparent that the onerous regulations imposed by Dodd-Frank have contributed to the decrease in startups and reduced access to credit for small businesses. This phenomenon not only hinders economic growth in the U.S., but impacts consumers as small businesses and startups are often leaders in product innovation. For those supporting Dodd-Frank, this should be a wake up call that it is time to look to much needed reforms that will encourage small business growth and innovation, instead of deterring innovation and competition in the market.

 Photo Credit: Ian Lamont

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Hillary Clinton: Dodd-Frank Passed for "Political Reasons"

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Posted by Justin Sykes on Thursday, October 13th, 2016, 1:42 PM PERMALINK

Hillary Clinton has made it a point throughout her campaign to make it clear that she is the candidate that will hold Wall Street and the banking industry accountable, and continue to carry the torch of big government control over the market that was lit by the Dodd-Frank Act six years ago. Clinton even made it a point to have the Dodd-Frank poster child, Senator Elizabeth Warren (D-Mass.), appear with her repeatedly on the campaign trail.

However recently released e-mails from inside the Clinton campaign detail excerpts from her infamous paid speeches to Wall Street that show her so-called principled stance against Wall Street and support for Dodd-Frank was not so much principled as it was a complete and outright lie to the American people.

In a speech to Goldman Sachs in 2013, Clinton evidenced her true lack of support for the Dodd-Frank Act, alluding to the fact that Dodd-Frank and the over 20,000 pages of resulting regulations were not passed for the benefit of American consumers, but simply for political optics at the time. Clinton stated that: 

“There was a lot of complaining about Dodd-Frank, but there was also a need to do something because for political reasons, if you were an elected member of Congress and…everybody in the press is saying it’s all the fault of Wall Street, you can’t sit idly by and do nothing…and I think the jury is still out on that because it was very difficult to sort of sort through it all.”

In similar remarks to Deutsche bank in 2014, Clinton made it clear that deep down she thought financial reform following the financial crisis should come from the financial industry, thus calling into question her praise of Dodd-Frank. Clinton remarked that:

“Teddy Roosevelt…took on what he saw as excesses in the economy, but he also stood against the excesses in politics. He didn’t want to unleash a lot of nationalist, populist reaction…Today there’s more that can and should be done that really has to come from the industry itself…and I really believe that our country and all of you are up to that job.”

Thus the questions that arise are if Dodd-Frank was passed solely for “political reasons” and not as a real and necessary response to the financial crisis as Americans were lead to believe, then why is Clinton still supporting Dodd-Frank and how many other lawmakers supported Dodd-Frank solely for political reasons?

If big government “excesses in politics” are not the answer but instead, as Clinton remarked, the industry and market itself should correct such issues, why does Clinton continue to advocate for anti-free market policy such as Dodd-Frank? 

Clearly Mrs. Clinton has no problem playing politics when it benefits her, and is all too willing to support legislation that throws the economy and American consumers under the Dodd-Frank bus solely for political reasons. 

Sadly, average Americans do not see the benefit of Clinton’s political reasoning, and are instead stuck with the Dodd-Frank behemoth that has led to increased financial costs, reduced access to capital, and a general sense of helplessness in the face of an out of control regulatory regime.

 

Photo credit: Brookings Institution 

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