As happens too often when the federal government gets involved, a seemingly well-intentioned bill hastily signed into law in 2010 wreaked havoc on economic opportunity in America. You may be surprised to learn this is not a column about Obamacare. Instead, I am talking about a piece of legislation which has become known as “Obamacare for banks.”
The Dodd-Frank Wall Street Reform and Consumer Protection Act, more commonly known simply as Dodd-Frank, has unnecessarily expanded the federal government and hurt consumers and job-creators.
On May 8, the House voted to comprehensively roll back Dodd-Frank’s regulatory stranglehold on our economy and replace it with the Financial CHOICE Act.
Dodd-Frank was passed in response to the 2008 financial crisis. Rather than addressing the lack of accountability for institutions whose decisions drove the crisis, Dodd-Frank compounded the problem by creating a duplicative, unaccountable bureaucracy, mandating more than 27,000 new regulatory restrictions, and making permanent taxpayer-funded Wall Street bailouts for banks deemed “too big to fail.”
The damage to our economy caused by Dodd-Frank is undeniable. Big banks have actually benefitted while compliance costs crush smaller financial institutions. On average, we have lost one community bank or credit union a day due to overregulation. Monthly banking fees have increased by 111 percent, and the number of banks offering free checking accounts has been cut in half. These consequences make it more difficult for American families and small businesses to access the financial services and startup capital they need.
I voted against House passage of Dodd-Frank, and after talking with Nebraskans across numerous industries about its growing consequences, I introduced a bill in 2015 to repeal it. When Financial Services Committee Chairman Jeb Hensarling introduced the Financial CHOICE Act this year to replace Dodd-Frank’s regulations with real reforms, I was pleased to cosponsor the legislation.
The Financial CHOICE Act lifts the regulatory burden on community banks while increasing accountability and ending taxpayer bailouts. Banks must keep 10 percent in cash reserves or submit themselves to stronger oversight, and penalties for fraud are strengthened. It also implements the Regulations from the Executive in Need of Scrutiny (REINS) Act, which I have long supported to make costly rulemaking by the executive branch subject to congressional approval. Additionally, it cuts the deficit by $24 billion over the next 10 years and requires a full audit of the Federal Reserve.
Importantly, the bill also restructures the Consumer Financial Protection Bureau to subject it to congressional oversight and the appropriations process. This federal agency created by Dodd-Frank has been allowed to run rogue for too long, collecting consumers’ information without their knowledge and issuing sweeping regulations with no accountability. Under the Financial CHOICE Act, the agency will no longer be able to exercise unilateral authority and will instead have to demonstrate whether it can properly fulfill its intended purpose of protecting consumers.
Many provisions in Dodd-Frank had nothing to do with the financial crisis but simply rode along with the bill to passage. Some of these items included onerous requirements on companies to amass and disclose employee compensation information, restrictions on the use of arbitration to reduce legal costs, and an unrealistic mandate on manufacturers to certify the origin of minerals used in production regardless of how far down the supply chain they fall. The Financial CHOICE Act repeals these and other unrelated provisions to keep the focus on strengthening our economy.
Dodd-Frank has impeded economic growth for too many years without delivering the protections it claimed it would create. Now is the time to prioritize Main Street over Wall Street and unleash greater opportunity for Americans.