Last week the House Financial Services Committee approved H.R. 5983, the Financial Choice Act, to be considered by the House of Representatives. This sorely needed piece of legislation, introduced by the Chairman of the Financial Services Committee, Representative Jeb Hensarling (R-Texas), is the solution to the stagnant economic growth that the United States has experienced over the past several years. By undoing key provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, also known as Dodd-Frank, the Financial Choice Act will add much needed stability to our financial system.
Passed in 2010 by a Democrat controlled Congress, Dodd-Frank was supposed to promote financial stability and end “too big to fail”. This year, its 6 year anniversary, Dodd-Frank has failed to achieve its objectives, it has provided no stability and has done little to promote American consumers.
As Chairman Hensarling so eloquently put it: “we are stuck in the slowest, weakest, most tepid recovery in the history of the Republic. The economy does not work for working people.” In addition to the staggering $36 billion in regulatory costs and millions of hours in paperwork, the end result of Dodd-Frank is an added cost of $112 to every American.
What the Financial Choice Act does that Dodd-Frank has not is increasing the market’s transparency and accountability to the American people and reigning in to “too big to fail”. It amends the Bankruptcy code to accommodate the failure of large, complex financial institutions and prohibits the use of the Exchange Stabilization Fund, a reserve intended to be used in the most severe of situations, to be used for the bailout of banks and other financial institutions.
The most senior Democrat on the Financial Services Committee, Representative Maxine Waters (D-Calif.) called the act a “highly partisan, damaging piece of legislation”. A piece of legislation that she noted would “kill Dodd-Frank and harm consumers”. However, Representative Waters conveniently overlooked the harm that Dodd-Frank has done to consumers. As Representative Randy Neugebauer (R-Texas) articulated, “regulations intended for Wall Street have hurt Main Street” and that “since the financial crisis we have lost one community financial institution per day”.
Representative Sean Duffy noted that in the midst of the financial crisis Rahm Emmanuel, then-current Chief of Staff for the President and presently the Mayor of Chicago, stated “never let a good crisis go to waste”. Democrats took full advantage of the financial crisis to push their agenda.
Representative Waters criticizes the Financial Choice Act as a “highly partisan” piece of legislation, but the reason that the American economy has not recovered is the partisan piece of legislation that the Democrats pushed through 6 years ago, Dodd-Frank. That massive piece of legislation, which is 848 pages long, was passed through a Democrat controlled Congress without one vote from a House Republican filled with job killing rules and regulations that have not benefited the American people.
It’s safe to say that Representative Waters’ remarks concerning the Financial Choice Act were better suited for Dodd-Frank. Americans have had to endure six years of Dodd-Frank and the stagnant growth, increased costs, and hundreds of billions of dollars spent on saving large financial institution that came with it. Chairman Hensarling said it best: “there is a better way forward and it’s called the Financial Choice Act.”
Photo Credit: Gage Skidmore
To watch the hearing in its entirety click here.