Hensarling: America has struggled for too long

Released by the office of U.S. Congressman Jeb Hensarling

WASHINGTON – Congressman Jeb Hensarling (R-TX), Chairman of the House Financial Services Committee, released the following statement formally introducing the Financial CHOICE Act, the Republican alternative to the failed Dodd-Frank Act:

“It has been almost seven years since the passage of the Dodd-Frank Act. We were told it would lift our economy, but instead we are stuck in the slowest, weakest, most tepid recovery in the history of the Republic. The economy does not work for working people. They have seen their paychecks stagnate. They have seen their savings decimated. We have seen millions who remain unemployed and underemployed and an economy working at roughly half of its potential. 

Dodd-Frank has been a greater burden to enterprise than all other Obama-era regulations combined. 

There is a better way and it is the Financial CHOICE Act of 2017. 

The bill replaces onerous government fiat with market discipline; ends bailouts with bankruptcy; throws a deregulatory life preserver to our community financial institutions; replaces complexity with simplicity; holds both Washington and Wall Street accountable; and unleashes capital formation so the economy can move yet again for the betterment of our citizens. Under the Financial CHOICE Act there will be economic opportunity for all and bank bailouts for none.

Again, bank bailouts for none. Perhaps that’s why press reports indicate that most Wall Street banks oppose the Financial CHOICE Act. 

The damage Dodd-Frank has done to consumers and businesses is well known to every Member, but let me remind you of just a few. 

75 percent of banks USED to offer free checking before Dodd-Frank became law; by 2016 only 38 percent did. 

Minimum balance requirements to qualify for free-checking have almost quadrupled and average monthly fees have more than tripled. This helps explain why the number of households that are unbanked and underbanked is up by more than 3 million since the passage of Dodd-Frank.

Data show that there are 50 million fewer credit cards available since 2008, and the remaining options cost more now, hurting small businesses and struggling families.

The Federal Reserve reports that once Dodd-Frank’s Qualified Mortgage rule is fully phased in, an estimated one-third of black and Hispanic borrowers will be denied mortgages due to its rigid debt-to-income ratio. 

An overwhelming majority of community banks report that Dodd-Frank’s “regulatory burdens are preventing them from making more residential mortgage loans” and that they have had to hire more staff just to deal with legal compliance issues.

The Dodd-Frank Act represents an even more dangerous prospect that is, namely, politicized lending. Washington elites are now allocating our capital to fulfill their agendas -- devoid of any checks and balances or due process.

And it is impossible to bring up the threat of politicized lending without bringing up the CFPB. 

The Financial CHOICE Act re-establishes this rogue agency as a civil enforcement agency, patterned after the Federal Trade Commission. One that is responsible for actually enforcing the enumerated consumer protection laws written by Congress, instead of making up its own law in an unfair, deceptive, and abusive manner. 

True consumer protection is only to be had in competitive, transparent and innovation markets which are vigorously policed for fraud and deception. That’s what the Financial CHOICE Act is all about.

The bill relieves financial institutions from regulations that create more burden than benefit in exchange for meeting high, yet simple, capital requirements—that is loss absorbing capital which is like an insurance policy against failure. 

Instead of government bureaucrats overseeing banks that plan their failures, the CHOICE Act would see banks plan for their expansions by helping grow the economy for every citizen.

The Financial CHOICE Act repeals Washington’s authority to designate too-big-to-fail firms – or SIFIs as they are known – going forward and retroactively repeals previous non-bank SIFI designations. 

The bill recognizes that illegal activity by bad actors at financial institutions can harm the financial well-being of consumers and society and therefore imposes the toughest penalties in history for financial fraud, self-dealing and deception. 

The bill repeals the misguided, complex and unneeded Volcker Rule, as it has made capital markets less liquid, more fragile, and threatened financial stability. Even a Federal Reserve report now admits to this.

The bill will unleash opportunities for economic growth, foster capital formation and provide Main Street job creators with regulatory relief so more Americans can go back to work, have good careers and give their families a better life. 

Ending the bureaucratic nightmare that is Dodd-Frank and replacing it with the simpler capital rules of the Financial CHOICE Act is imperative. America has struggled for too long. 

It is time again to hold Washington accountable; it’s time to hold Wall Street accountable; it is time for economic growth for all; it is time for bank bailouts for none. So I look forward today to our hearing and soon passing the Financial CHOICE Act.” 

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