House Republicans have set their sights on the Dodd-Frank Act and took decisive action toward scrapping the controversial measure that regulates U.S. financial institutions.
Six years after Congress enacted Dodd-Frank, the House Financial Services Committee gave its blessing to the Financial CHOICE Act — in effect, Committee Chairman Jeb Hensarling, R-Texas, told me, “a vote to repeal and replace Dodd-Frank.”
Hensarling also revealed that he has briefed Donald Trump about the new measure and the Republican presidential nominee “was favorably disposed. He understands that Dodd-Frank is harming working Americans and harming their ability to get auto loans, and mortgages, and credit cards, and taking away their freedom of choice and hampering economic growth.”
A week after the vote by Hensarling’s committee on Sept. 13, former Federal Reserve Board Chairman Alan Greenspan told Bloomberg News he predicted Dodd-Frank “was going to cause as much a problem as wage and price controls did in the 1970s. It is a mess. It is, in effect, the government telling the regulatory agencies to ‘solve the problem.’ It is very difficult to implement such instructions. I don’t think this bill is working at all. I would like to see it repealed.”
Hensarling feels repeal is a cause worth fighting for in an election year. In an exclusive interview with Newsmax, the Texas lawmaker spelled out why he felt the Financial CHOICE Act was a positive alternative to Dodd-Frank — and so necessary.
“We all know that the job engine of America is small business, and small business is dying on the vine,” Hensarling told us, “Bank lending to small businesses is at a 25-year low. Entrepreneurship in businesses is at roughly a generational low. We are seeing more small business deaths than births. Community banks, and credit unions are dying and the culprit is Dodd-Frank.”
In sharp contrast to Dodd-Frank, he explained, “there will be no more taxpayer bailouts under the Financial CHOICE Act and no ability of the federal government to give the firms the privileged ‘too big to fail’ moniker.”
But Hensarling emphasized that the new measure “holds Wall Street accountable by having the strongest and most severe penalties ever for fraud and deception.”
“It also holds Washington accountable as well to ensure that people are not shaken down by their government,” he said, “that all are accorded due process, that the Constitution is respected, that the Administration is put in charge of enforcing laws not making laws.”
In condemning what he called “the sheer weight, volume, complexity, cost and uncertainty of Dodd-Frank,” Hensarling maintained that the Financial CHOICE Act “is a bill we believe will provide economic growth for all and ensure bailouts for none.
“The simple proposition is, If banks will put up large amounts of loss-absorbing private capital in place of taxpayer bailouts, then they’ll be free of much of the job-crushing, onerous regulations of Dodd-Frank.”
The advantages of the Financial Choice Act, according to Hensarling, are threefold: “First, it would make it a whole less likely there would be a bailout because we would have market discipline controlling the size and complexity of institutions.
“Second, under Dodd-Frank, there is a taxpayer fund already available. We take away the taxpayer bailout fund.
“Third, we substitute a new chapter in the bankruptcy code for large complex financial institutions . . . Bankruptcy and not bailout is what happens for any other institution that fails. There will be institutions that fail. In America, if you lose your ability to fail, you lose your ability to succeed one day.”
John Gizzi is chief political columnist and White House correspondent for Newsmax.
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