Posted by on February 09, 2017
By: Jeb Hensarling
The Obama presidency placed no greater burden on America’s growth potential than the avalanche of regulations that smother the U.S. economic system. The most destructive and dangerous of the new regulatory bureaucracies created by the Democrat-dominated 111th Congress is the Consumer Financial Protection Bureau.
The CFPB stands with ObamaCare as a crowning “achievement” of Mr. Obama’s transformation of America. With unprecedented automatic funding provided directly by the Federal Reserve, the agency is unanswerable to anyone. Democrats chose to insulate it from Congress, the president, voters and the democratic process. The U.S. Circuit Court of Appeals for the District of Columbia noted as much in its recent PHH v. CFPB decision, which ruled the bureau’s governing structure unconstitutional. The court said the unelected CFPB director “enjoys more unilateral authority than any other officer in any of the three branches of government of the U.S. Government, other than the President.”
The CFPB is arguably the most powerful, least accountable agency in U.S. history. CFPB zealots have the power to determine the “fairness” of virtually every financial transaction in America. The agency defines its own powers and can launch investigations without cause, imposing virtually any fine or remedy, devoid of due process. It requires lenders essentially to read their clients’ minds, know and weigh their clients’ comprehension levels, and forecast future risk. It can compel the production of reams of data and employ methodologies that “infer” harm without finding any specific instance of harm or knowing violation.
The regulatory web spun by the CFPB can make every provider of financial services guilty until proven innocent, inviting selective enforcement and financial shakedowns. The CFPB is the embodiment of James Madison’s warning in Federalist No. 47 that “the accumulation of all powers, legislative, executive and judiciary, in the same hands . . . may justly be pronounced the very definition of tyranny.”
This tyranny has harmed the very consumers it purports to help. Since the CFPB’s advent, the number of banks offering free checking has drastically declined, while many bank fees have increased. Mortgage originations and auto loans have become more expensive for many Americans.
No corner of American finance is beyond the CFPB’s grasp, even auto dealers—which are specifically excluded from its jurisdiction by the Dodd-Frank Act. To dodge this legal constraint, the CFPB regulates auto dealers through enforcement “bulletins” on auto lenders, employing statistical analysis rather than specific acts to charge lenders with discriminatory lending. The race of borrowers is inferred based on the borrowers’ names and home addresses. Through this ruse they smear and shake down lenders.
The House in 2015 voted 332-96—with 88 Democrats in support—to force the CFPB to rescind its auto-lending guidance. Sen. Elizabeth Warren, the intellectual mother of the CFPB, led Senate Democrats’ opposition to the bipartisan bill. This is a sign the 52-member Senate Republican majority probably will be unable to overcome Democrat filibusters on legislation limiting the CFPB’s powers.
President Trump should immediately fire CFPB Director Richard Cordray, citing the president’s constitutional responsibility to take care that the laws are faithfully executed. A new director could first undo all harmful actions taken by the CFPB during the Obama era. He could then implement policies that actually benefit consumers, such as limits on class-action lawsuits wherein plaintiff law firms get fortunes but injured financial consumers get pennies.
The CFPB could also protect Americans from government abuses. A new director could penalize government bond issuers that fail to disclose unfunded pension liabilities. It could also put an end to government accounting and solvency standards that, if adopted by private companies, would result in fines or a firm’s closure.
Yet even with good policy, the CFPB would still be unconstitutional. For those who reject Sen. Warren’s view that the ends justify the means, the agency must be functionally terminated. Consumer protection can instead come through an accountable and constitutional process.
The Senate can achieve this with a simple majority vote. Dodd-Frank requires the Fed to fund all CFPB budget requests automatically—creating an estimated $6.6 billion funding stream over the next 10 years. Under a budget process known as reconciliation, the House Financial Services Committee, which I chair, and the Senate Banking Committee could be mandated to save $6.6 billion over 10 years of the budget. In the ensuing reconciliation bill the two committees could then direct the Fed to terminate CFPB funding. Senate Democrats could not filibuster the bill.
Congress could then transfer the CFPB’s consumer protection role to the Federal Trade Commission or back to traditional banking regulators, where it resided before the CFPB’s creation. A Senate point of order requiring 60 votes could be brought against these provisions, on the ground that they don’t belong in a reconciliation bill. The advantage of putting the restructuring language in the reconciliation bill is that if Democrats use the point of order to strike the language, they—not Republicans—would have elected to end all CFPB funding, leaving the new system of consumer financial protection to be decided in future legislation.
When Democrats sought to take consumer protection outside the democratic process, consumers were harmed by a reduction in competition. With fewer lenders serving fewer borrowers, fewer businesses employed fewer workers. A healthy economy is the first casualty of any war on credit, and a loan denied becomes a job lost. The CFPB has eroded freedom, trampled due process and killed jobs. It must go.
Posted by on February 08, 2017
‘Overregulation has caused costs to go through the roof, many banks have been shut down and that has hit small businesses’
‘We can’t afford to keep going the way we’re going’
By Joyce M. Rosenberg
Small community banks say Dodd-Frank regulations too much of a burden.
NEW YORK — Community banks that can be vital to many small businesses are hopeful about changes that the Trump administration and Congress have promised to legislation passed after the financial crisis that tightened supervision of Wall Street and the banking industry.
The number of small, local banks has declined since the Great Recession, a change that advocates feel was intensified by the paperwork the increased oversight entails. That's disappointing to many small business owners, who find it easier to form relationships with community bank branch managers and bankers than with those at regional or international banks. A community banker can advise them and steer business their way, for example, connecting a company owner with a new accountant.
"I need someone I can talk to who can understand the dynamics of a small business," says Ken Yager, who owns Newpoint Advisors, a Schaumburg, Illinois-based consulting firm. "With a big bank, you just disappear into an account number."
Jeff Bridgman remembers when his community bank would cover an overdraft for his antiques business, knowing he'd have funds in the account within a few days. He had a close relationship with the employees even as the bank went through several mergers over 15 years. But a staff turnover at the bank, now one of the more than 200 branches of Northwest Bank, left him without the attention and support he had in the past.
"I don't know how a bank could help me today, so I don't even consider them as a tool for growth," says Bridgman, whose eponymous company is located in York, Pennsylvania. "The bank for me today is just a place for money to sit for a couple of days while I write checks."
The U.S. had 5,521 community banks as of Sept. 30, down more than 25 percent from 7,442 at the end of 2008, when the banking crisis was still in its early days, according to the Independent Community Bankers Association, an industry group. The Federal Deposit Insurance Corp. has reported nearly 500 bank failures since 2009, most of them small banks. Others have merged to cut costs and stay in business, but many have struggled even as the economy has recovered.
Industry groups blame increased regulation, including the Dodd-Frank bill passed by Congress in 2010. Last week, President Donald Trump signed an executive order directing the Treasury secretary to review Dodd-Frank and its thousands of regulations. Changes in the law would have to be made by Congress, and House Financial Services Committee Chairman Jeb Hensarling of Texas has proposed modifying portions that affect smaller banks.
Dodd-Frank has created additional procedures and paperwork for all banks, but community banks have a harder time meeting the requirements because they have far smaller staffs than regional or national financial institutions, says Paul Merski, the ICBA's chief economist.
"You can't say which provision it is that's causing you concern. It's more like death by a thousand cuts," says Tim Zimmerman, president of Standard Bank, a Pittsburgh-area community bank with nine branches. "It's exhausting management and staff of community banks around the country."
The ICBA is advocating for several banking laws to be repealed or modified. Among them:
The changes were intended to protect against failures like Lehman Brothers in 2008, and community banks don't pose a similar threat, the ICBA says. Community banks are likely to have several billions of dollars in assets each, according to the FDIC, while regional banks may have assets in the hundreds of billions of dollars and international banks like Bank of America and Wells Fargo have assets into the trillions. Small business advocates say they're feeling the reverberations.
“The overregulation has caused costs to go through the roof, many banks have been shut down and that has hit small businesses," says Javier Palomarez, president of the United States Hispanic Chamber of Commerce.
Yager, whose firm specializes in helping financially troubled small businesses, uses larger banks for tasks like money transfers, but depends on his community bank for most of his needs. He finds community bankers more willing than larger ones to try to help companies succeed.
"They'll ask questions like, what collateral do you have? Do you have a plan? What have you missed in your business that could help make things better?" he says.
In the meantime, struggling community banks are expected to continue merging. Standard, the Pittsburgh-area bank, is in the process of consolidating with another area community bank, Allegheny Valley Bancorp, which has eight branches.
"We can't afford to keep going the way we're going," Zimmerman says.
Posted by Staff on November 16, 2016
Remarks to the Exchequer Club, Nov. 16, 2016
*As Prepared for Delivery
Good afternoon, everyone. I’m Jeb Hensarling – and I approve this message.
No, I think we’ve all had enough of that to last us for a while. Our long national nightmare is finally over: the 2016 campaign. Don’t worry; it will be at least a couple of weeks before the next campaign season really picks back up again. Just for fun, the other day I googled “2020 presidential election.” It lists 49 potential candidates. So get ready, America! We’ve only got about 1,155 days to Iowa!
Thank you for inviting me to speak today. It’s been a while since I’ve spoken to the Exchequer Club, and it’s been a while since I’ve been in Washington. As all of you know, members of Congress have been back in our home states for several weeks. Some of you may know it as “flyover country.”
But it’s really the Heartland of America. By electing Donald Trump our next president, the people of the Heartland rose up and sent a clear message to the ruling elites last week. They’re not going to take it anymore and they expect change.
And they have every right to be upset. They see themselves working too hard and not getting ahead – like trying to run up the down escalator. This economy is still not working for working people.
They’re upset at seeing their dreams for their children’s future diminished. They’re upset at of seeing their values ridiculed and scorned by the establishment.
And every day they see their liberties and opportunities slipping away as Washington grows larger, more intrusive, more distant, more powerful and more arrogant.
So a hard fought election may be over, but our work is just beginning. We must now help bring our country together and advance the cause of a better, stronger, more prosperous America. I believe if we adhere to the Founders’ principles, we can put in place policies that create the real change Americans so desperately want.
The Founders believed “We the People” were capable of governing ourselves. They distrusted unchecked power, so they limited government and promoted individual freedom, free enterprise and the rule of law.
These principles are what enable equal opportunity, prosperity and civil society to flourish.
And on the Financial Services Committee, these principles are embodied in the proposals we offer and which I’ll discuss later, such as the Financial CHOICE Act to promote economic growth for all and bank bailouts for none, the FORM Act to bring accountability and transparency to the Federal Reserve, the PATH Act to create a sustainable housing finance system, and numerous other ideas to help Americans on Main Street achieve financial independence and a better, more hopeful life.
Regrettably, when Americans look at Washington today, they see our federal government has drifted far from the Founders’ vision. Instead of limited government comprised of three accountable branches, they see power concentrated into a large and intrusive centralized government, ruled not by “we the people” but by so-called experts in a new fourth branch that reaches further and deeper into our lives and tries to make decisions for us.
The rise of this fourth branch of government should concern every American. Because the rise of agency government risks turning our elections into a hollow exercise. As author and scholar Steven Hayward wrote, if we allow government to be run by unaccountable bureaucrats then “elections no longer change the character of…government” because “no matter who wins…the experts in the agencies rule and every day extend their rule further.”
And up until last Tuesday’s election of Donald Trump, millions have felt powerless to change it.
As Professor Jonathan Turley, a nationally recognized legal scholar at George Washington University has pointed out, this unaccountable fourth branch “now has a larger practical impact on the lives of citizens than all the other branches combined.”
Very few government policies, for example, have a more profound impact on the lives of working men and women than those that affect their ability to have a secure retirement.
Yet no one elected by the people had a hand in developing the Department of Labor’s so-called fiduciary rule, which will affect how investment advice is provided to every 401(k) plan, every IRA, and every rollover or distribution to or from either.
Altogether, the rule is going to impact about $3 trillion of hardworking Americans’ retirement assets. It will make access to financial advice more costly and less available to millions of lower and middle income workers -- and no one in Congress voted for it.
The effects are already being felt months ahead of implementation. Merrill Lynch has already announced its clients will no longer be able to buy mutual funds in certain retirement accounts.
Others have protested the rule’s particularly harmful impact on those who work at small businesses.
“This rule would put a significant burden on small businesses and their employees, making it less likely that we will be sufficiently prepared for retirement,” says John Raine, president of a small manufacturing firm in Indiana.
The Trump Administration, working with our Republican majority in Congress, should make sure this harmful, bureaucratic rule does not go into effect as planned in just five months. This is just one example of how unelected, unaccountable government hurts working people.
Another example is the CFPB’s rule that would shut down small dollar lenders without a single vote ever being cast in Congress.
How important is small dollar lending? Let me tell you the story of Robert Sherrill. He was a hardened drug dealer. Eventually his crimes caught up with him and he spent several years in prison, but somehow he emerged with a resolve to build a better life for himself.
The only problem was that no one would take a risk on Robert. He couldn’t get a job. He couldn’t get a loan. He couldn’t even get a bank account. The deck was stacked against him. It was against these odds that Robert decided that if he was going to turn his life around, he needed to start his own business.
Enter a local small dollar lender who understood Robert’s situation and designed a financial product to fit his needs.
“The payday loan I got…was a lifeline. It enabled me to start a business,” Robert said.
Today he employs 20 people. He is a member of his local Chamber of Commerce and Better Business Bureau. He is a productive citizen of his community. He went from serving hard time to making it possible for others to live better times.
And it would not have been possible if he couldn’t access a small dollar loan that the CFPB today essentially wants to outlaw – again, without a vote by Congress. These are just two examples of rule promulgated by the unelected and the unaccountable. These are just two rules that hurt struggling citizens. And these are two examples of rules the House Financial Services Committee, working with a President Trump, hopes to reverse.
Article One, Section One of our Constitution states “all legislative powers herein granted shall be vested in a Congress.”
It is time for Congress to take greater responsibility for federal regulations, because when Congress allows its legislative authority to be usurped, the people’s right to both self-government and due process is undermined. Instead of being governed by the rule of law, citizens become more and more governed by the rule of rulers.
On the Financial Services Committee, one of our top priorities for the 115th Congress is to arrest this assault on the people’s constitutional right to self-rule. They have been deprived of their voice for too long. We will work to make government accountable again.
Accountability is at the heart of our Republican plan to repeal and replace Dodd-Frank, called the Financial CHOICE Act. It demands greater accountability from both Washington and Wall Street.
It makes sure every financial regulation passes a cost-benefit test, also known as common sense, so we’ll know a proposed rule’s impact on economic growth before it takes effect.
With the exception of the Federal Reserve’s conduct of monetary policy, it puts all financial regulatory agencies on budget, because the bare minimum level of accountability to “We the People” is to have their elected representatives in Congress control the power of the purse.
Our plan also holds Washington accountable by converting financial regulatory agencies presently headed by single directors – the CFPB, the Office of Comptroller of the Currency, and the Federal Housing Finance Agency – into bipartisan commissions. A bipartisan structure will result in better rulemakings as agencies start considering multiple viewpoints and perspectives.
Another critically important provision of the Financial CHOICE Act requires all major financial regulations to first be approved by Congress before they can take effect.
This reform has already passed the House as the REINS Act, and it effectively returns Article 1 lawmaking to its rightful place: Congress.
Next, we repeal the Chevron doctrine. This doctrine allows the bureaucrats to put their thumbs on the scales of justice, making sure the judiciary always gives deference to their interpretation of the law. The Chevron doctrine is unfair, it’s an affront to due process and justice, and if we’re going to make government truly accountable to the people, the Chevron doctrine has got to go.
At the same time the Financial CHOICE Act holds Washington accountable, it also holds Wall Street accountable. It imposes the toughest penalties in history for those who commit financial fraud and deception. We must ensure consumers and investors are protected, treated fairly and have access to competitive, transparent and innovative markets that are vigorously policed for fraud and deception.
In addition to greater accountability, another key part of our committee’s agenda is to end too big to fail once and for all.
Proponents of Dodd-Frank promised it would end too big to fail and taxpayer-funded bailouts. But it did the exact opposite. Dodd-Frank writes too big to fail and taxpayer-funded bailouts into law.
Republicans on the Financial Services Committee offer a simple answer to this problem: bankruptcy, not bailouts.
A new subchapter of the Bankruptcy Code tailored to specifically address the failure of a large, complex financial institution is part of our Financial CHOICE Act. Taxpayer bailouts of financial institutions must end and no company can remain too big to fail.
And while we’re on the subject of bailouts, another major focus for our committee in 2017 will be the reauthorization of the National Flood Insurance Program, which is set to expire at the end of September.
Unfortunately, this government monopoly is beyond broke – it is bailout broke. $23 billion in debt thanks to Byzantine rules, misguided subsidies and zero consumer choice.
To fix this unsustainable situation, we will pass a reauthorization bill that begins the transition to a competitive, innovative and sustainable flood insurance market where consumers have real choices.
At a time when the Richmond Federal Reserve’s “bailout barometer” shows that U.S. taxpayers stand behind 60 percent of all financial system liabilities, ending too big to fail and getting more private capital into the flood insurance program are paramount.
Our committee will also continue working to relieve financial institutions from regulations that create more burden than benefit. Our Financial CHOICE Act replaces growth-strangling red tape with the reliable accountability of higher and simpler capital requirements.
This approach not only helps unleash greater opportunities for small businesses, innovators and job creators, it also stops investors from betting with taxpayer money.
For banks willing to put their investors in front of hardworking taxpayers in the event of a failure, the Republican plan will free banks to help more Americans finance their individual American dreams.
And for millions of Americans, the very definition of the American dream is owning a home of their own.
Regrettably, Dodd-Frank and the CFPB make it harder for Americans to achieve that dream.
They give Washington elites the power to decide who can qualify for a mortgage, and that’s why the Federal Reserve reports one-third of black and Hispanic borrowers will be hurt by the CFPB’s Qualified Mortgage rule when it is fully phased in, based solely on its rigid debt-to-income ratio. And again, all without a vote by Congress.
The American people deserve a better path forward – one that leads to a sustainable and fair housing finance system, so everyone who works hard and plays by the rules can have opportunities and choices to buy homes they can afford to keep.
At its core, the housing market is not fundamentally different from the market for any other asset. Housing is not immune to the economic laws of supply and demand or risk and reward.
Thus, Republicans offered the PATH Act, which principally relies upon private capital and market discipline to create a sustainable housing finance system. The PATH Act includes four fundamental goals essential to the development of any free market.
First, the role of government is clearly defined and limited. Second, artificial barriers to private capital are removed to attract investment and encourage innovation. Third, market participants are given clear, transparent, and enforceable rules to foster competition and restore market discipline. Lastly, consumers are afforded informed choices in determining which mortgage products best suit their needs.
The PATH Act specifically:
It’s been more than 8 years since the financial crisis, which was largely caused by Washington’s misguided housing policies. It’s been more than 6 years since Dodd-Frank failed to do anything about Fannie Mae and Freddie Mac.
It’s not easy; it’s the very definition of a “heavy lift,” but our committee looks forward to working with the Trump administration, to finally building a housing finance system that is sustainable for homeowners, for hardworking taxpayers, and for our economy.
Ladies and gentlemen, free enterprise has made America the fairest, most prosperous, most creative, most generous, and most compassionate society the world has ever known.
Nothing else has lifted more people out of poverty. And no other economic system allows people to earn their success through hard work, personal responsibility and individual initiative.
But instead of encouraging and helping people earn their success, Washington’s approach to poverty creates dependency on the state. It strips people of the dignity that comes from earning their own way. You would be hard pressed to create a system that is less compassionate.
As the Dalai Lama recently reminded us in the pages of the New York Times: “A compassionate society must protect the vulnerable while ensuring…policies do not trap people in misery and dependence.”
HUD was supposed to be one of Washington’s chief weapons in the War on Poverty launched by President Johnson more than 50 years ago. Yet HUD’s public housing projects are typically any city’s most despairing places, where generations of poverty-stricken families are warehoused and sealed off from the best schools, best job opportunities and safest neighborhoods.
HUD symbolizes the Left’s top-down, command and control, centralized planning approach that measures compassion for the poor based on how many programs Washington creates and how much money it spends.
As chairman of the committee with jurisdiction over HUD, I am committed to bringing new ideas to the table on better ways to fight poverty. There is without a doubt a proper and important role for government assistance. We must always have a strong social safety net below which no one can fall.
But right alongside that safety net, there needs to be – as former HUD Secretary Jack Kemp called it – “a ladder of opportunity on which everyone can climb.”
That ladder of opportunity is work. The best anti-poverty program ever devised is a job, even a part-time job. Of all adults who were living in poverty in 2014, almost two in three were not working at all. Compare that to only 2.7 percent of full-time workers and only 17.5 percent of part-time workers living in poverty.
We have a moral responsibility to lift these Americans up.
Let me tell you another story. I’ll never forget the single mom I met who was working at a retail store in Dallas.
Before getting her job, she told me she had lived her entire life in public housing in New Orleans until Hurricane Katrina hit and, like many, fled to safety in Texas with her children. Away from public housing’s desperate environment for the first time, she was finally able to take control of her life. “Now when there’s food on the table, my sons know I provided it through my hard work. Now when there’s a roof over their heads, they know that’s because of me,” she said.
She reminds us all that a job is more than just a paycheck. It’s about dignity and respect.
And we want all those struggling in poverty to know the pride and dignity that comes with work.
Under the leadership of Speaker Ryan, House Republicans have put forward a far-reaching blueprint to empower all Americans to achieve the American Dream.
I was honored to be part of the task force that developed this plan, which includes reforms to ensure able-bodied adults work or prepare for work in exchange for receiving taxpayer benefits, including housing assistance.
Such reforms are truly compassionate because they aim to liberate the poor from lives of hopeless dependency, to lives of independence and economic opportunity.
And speaking of economic opportunity, our economy would be healthier – and more Americans would have the opportunity to achieve success – if the Federal Reserve did not wander into fiscal policy, and were more predictable in its conduct of monetary policy and more transparent about its decision-making.
Today we’re merely left with so-called “forward guidance,” which is unfortunately amorphous, opaque and improvisational. It leaves hardworking taxpayers uncertain as they attempt to plan their economic future.
History – not theory, but history – shows that when the Fed follows a monetary policy strategy of its own choosing, and transparently communicates that strategy to the rest of us, the economy performs better and more Americans get to wake up in the morning and go to work.
Therefore, reform of the Fed remains a top priority. The House-passed FORM Act protects the Fed’s independence to chart whatever monetary policy course it deems appropriate, but it has to give the American people a greater accounting of its actions.
Lastly, there is one other issue I want to discuss that doesn’t fall exclusively under the jurisdiction of the Financial Services Committee, but is such an enormous threat to the well-being of every American it must be on the agenda of every committee, and that’s our unsustainable national debt.
The number and trends could not be clearer. Under President Obama, our national debt has nearly doubled to an astounding $19.8 trillion. The portion of the debt owed to U.S. and foreign investors now represents the largest share of the economy since 1950 and is on track to hit the highest level in recorded history. GAO reports our debt will grow to three times the size of the economy over the next 20 years.
For over 200 years a core part of our collective American ethos was “we work hard today so our children can have a better life tomorrow.” But Washington’s insatiable greed means we’re letting government live better today, so our children will have to work harder tomorrow.
My children Claire and Travis are the reason why I gave up a career in the private sector to serve in Congress. And I will devote every ounce of my being, my heart and my soul to stopping Washington from mortgaging their futures and forfeiting the torch of liberty that rightfully belongs to my children and yours.
We cannot allow the debt deniers in Congress to make them the first generation of Americans to live with less freedom, less opportunity, and a lower of standard of living.
In Washington, I’ve learned to go to work each day with high hopes and tempered expectations. But the agenda I’ve just outlined – accountability for Washington and Wall Street, economic growth for all, regulatory relief, an end to taxpayer-funded bailouts, helping Americans escape poverty, and confronting the national debt – this should be a bipartisan agenda. Democrats should be just as interested as Republicans in tackling each one of these challenges.
Even though Republicans will be nominally in charge of both ends of Pennsylvania Avenue soon, I remain painfully aware of the Senate’s cloture rules. That means there will continue to be a need to work with the other party. I’m certainly willing to negotiate in good faith on any proposal – from the Financial CHOICE Act to housing finance reform and anything else that comes before our committee. And it is with great pride that I note that during the 114th Congress, our committee has successfully guided 76 bills to House passage. That’s 66 percent of all measures reported out of our committee. 32 committee bills were signed into law, including 9 that make needed changes to Dodd-Frank. All of them had bipartisan support.
I’m told that’s one of the best – if not the best – performance record of any major House committee. With government so divided, that’s not bad at all – and I’m proud of the hard work of so many of our members who reached across the aisle and put forward good, common sense solutions.
I have an open mind, but it is not an empty mind. And I never tire or falter in the advancement of the principles of freedom, free enterprise and limited constitutional government.
Today, millions of our fellow citizens face stagnant wages, excessive tax burdens, rising health care costs, barriers to work and upward mobility, and an economy held back by hyper-regulation, cronyism and unsustainable debt.
The work ahead will be hard and demands the best of us. But that’s exactly what the American people deserve. Let’s get started. Thank you.
Posted by on October 26, 2016
CFPB seeks to silence investigation targets, drawing fire on free speech
By Lorraine Woellert \ VIEW ONLINE
The CFPB wants to silence companies under investigation and is seeking greater freedom to share confidential information gathered as a result of those inquiries.
The bureau's proposal, part of a little-noticed update to its rules on records collection, drew unanimous fire from a broad coalition of financial companies, as well as from the American Bar Association and the American Civil Liberties Union, which called it unconstitutional.
The plan would prohibit targets of civil investigative demands or notice and opportunity to respond and advise letters — CIDs and NORA letters — from disclosing the receipt of such notifications. Legal experts called the proposal a restraint on free speech and warned that it could run afoul of laws that require companies to disclose material information to shareholders.
ACLU Legal Director Art Spitzer likened the proposal to National Security Letters, a product of the Patriot Act that give the FBI the power to collect customer records held by banks, telephone companies and internet service providers without a customer's knowledge.
"It's like the National Security Letter gag orders, except the compelling government interest is nowhere near what it is in a national security case," Spitzer said in an interview. "I'm not sure I see any compelling government interest."
On a practical level, the proposed rule would keep investors, shareholders and the public in the dark about federal investigations that might have a material impact on a company's operations. It also would give the bureau freedom to embark on "unwarranted fishing expeditions," said Jeb Hensarling, chairman of the House Financial Services Committee.
"Because of the potential for government abuse and First Amendment due process implications, Congress has typically limited such arrangements to investigations with national security implications," Hensarling wrote in a letter.
The bureau also drew criticism for a proposal that would allow it to share privileged information with any "federal, state, or foreign governmental authority, or an entity exercising governmental authority" whenever "it is relevant to the exercise of the agency's statutory or regulatory authority."
That provision could pierce attorney-client privilege, a "bedrock legal principle of our free society", and hobble companies seeking advice on regulatory compliance, said Linda Klein, president of the American Bar Association.
A CFPB spokesman declined to comment.
The proposal is an attempt by the bureau to clarify rules regarding the treatment of confidential investigative information.
Other financial regulators limit public disclosure of confidential information outside of the agency but don't distinguish between supervisory materials and enforcement materials. Current CFPB regulations make both categories confidential.
Posted by on September 06, 2016
$400 million in cash stacked on wooden pallets carried in secret by an unmarked cargo plane on the same day four American prisoners were released from Iran.
That’s what Chairman Sean Duffy and the Financial Services Oversight Subcommittee will be examining this Thursday, along with the impact of such a payment on terrorism financing.
Watch and share this video and be sure to tune in on Thursday morning at 10 a.m.
Posted by on August 19, 2016
Community bankers, credit union leaders and small business owners told us that’s absolutely not true.
Today’s report from Bloomberg (Headline: Bank Mergers Heading for Seven-Year High, Pushed by Costly Rules) once again exposes how feeble the White House’s spin is:
Here’s an irony: U.S. regulators looking to avoid bailouts of too-big-to-fail banks have passed so many rules that regional and local lenders are combining to stomach the costs.
The result: Banks are bulking up.
Mergers and acquisitions by U.S. banks surged last year to about $18 billion, the highest level since 2009. This year, firms are set to fly past that mark, according to data compiled by Bloomberg. In nine of the 10 biggest deals completed in 2016, banks selling themselves cited heightened regulatory burdens as a driver, Securities and Exchange Commission filings show. The extension of low interest rates is compounding that pressure by eroding profits.
The regulatory pressures forcing small banks to sell can have an unfortunate effect on local economies, said Bill Hickey, a principal and co-head of investment banking at Sandler O’Neill.
“They’re the pillars in their communities,” Hickey said of the lenders. “When a community bank goes away, that generally is not a good thing.”
“Regulation has been a story of unintended consequences and bureaucrats rarely getting anything right,” said Jeff Davis, managing director at Mercer Capital, a business valuation and advisory firm.”
Contrary to what the White House would lead you to believe, the $400 million to Iran was ransom, you can’t keep your health care plan if you like it, and Dodd-Frank is hurting small community banks, credit unions and Americans who want to achieve financial independence.
Posted by on August 10, 2016
Like Captain Renault, Americans are shocked – SHOCKED – that a report by the White House says a law supported by the White House doesn’t hurt community banks, no matter what.
Well, over the last few years Republicans on the House Financial Services Committee have asked community bankers, credit union leaders, and small business operators what THEY think about the Dodd-Frank Act. After all, as our nation loses one community financial institution each day, they are the ones who have to somehow comply with Dodd-Frank’s crushing regulatory burden.
Here are some of their voices:
“Community banks are resilient. We have found ways to meet our customers’ needs in spite of the ups and downs of the economy. But that job has become much more difficult by the avalanche of new rules, guidances and seemingly ever-changing expectations of the regulators. This—not the local economic conditions—is often the tipping point that drives small banks to merge with banks typically many times larger. The fact remains that there are 1,200 fewer community banks today than there were 5 years ago—a trend that will continue until some rational changes are made that will provide some relief to America’s hometown banks.” - Tyrone Fenderson, President and CEO of Commonwealth National Bank
Posted by on June 08, 2016
And, like clockwork, left wing Democrats found the nearest possible microphone to trot out stale talking points about “Wall Street” and criticize the plan before they even knew what was in it.
Just like President Obama, we’re in “myth-busting” mode. Here are some of their fact-free whoppers – and reality.
Fact: The Big Banks on Wall Street oppose the Financial CHOICE Act (as the New York Times reported here). And PoliticoPro reports that while big banks aren’t supporting the Financial CHOICE Act, “small banks, however, did not hesitate to get behind the plan.”
We remind Senator Warren that the CEO of Goldman Sachs said his big Wall Street firm would be “among the biggest beneficiaries” of Dodd-Frank and the CEO of JPMorgan Chase said Dodd-Frank benefits Big Banks by creating a “bigger moat” – “deterrents for small financial institutions to jump into new business lines and steal market share.”
Fact: The Financial CHOICE Act imposes the toughest penalties in history for financial fraud, self-dealing, and deception to protect consumers and strengthen markets. It demands real accountability from Wall Street. (Side note: It’s the Obama Justice Department – with its prosecutorial discretion and power – that has treated Wall Street as Too Big To Jail.)
Fact: To use the Senator’s terminology, “mega bankers” are opposed to our plan. Why? Because Democrats gave them a competitive advantage with Dodd-Frank. Today, Big Banks are the only ones with the manpower and resources to navigate Dodd-Frank’s regulatory maze. Community financial institutions don’t have the same luxury, which is why we’re losing an average of 1 per day.
And Senator Brown’s attack seems hypocritical since the Financial CHOICE Act takes a similar approach to one he proposed regarding capital standards.
By the way, Senator: It’s Dodd-Frank that has made life “tougher for ordinary Americans.”
Fact: The Orderly Liquidation Fund was created by Dodd-Frank and its sole purpose is to bail out Too Big To Fail banks. Here’s a pro-tip Josh, if it looks like a bailout and acts like a bailout, it’s a bailout.
Claim: “[T]here should be no more confusion about which party is on the side of big banks and large financial interests on Wall Street.” – White House Press Secretary Josh Earnest
Fact: You got that right. Unlike the failed Dodd-Frank Act, the Financial CHOICE Act will provide economic growth for all and bank bailouts for none.
Posted by on May 18, 2016
For the non-lawyers in the room, arbitration is a form of dispute resolution where parties agree to settle a claim with the help of an independent mediator, rather than hiring a lawyer, joining a class action lawsuit and waiting – sometimes for years – before our overcrowded court system can hear their case. But the CFPB is trying to prohibit this more cost effective alternative and the many benefits it offers consumers.
Without arbitration, consumers will be relegated to joining class action lawsuits, which is actually much worse for consumers according to a recent study from—wait for it—the CFPB. That’s right, the Bureau’s own 2015 study shows that only 13% of class actions are settled on a class-wide basis. And among the consumers eligible for relief in those 13% of cases, only 4% ever receive one red cent from the settlement. In other words, class action lawsuits benefit just 0.5% of the class members…ONE-HALF OF 1%.
Yet, that is what the federal government wants to force on consumers.
So what’s all this really about? Money.
This CFPB rule is nothing but a big, wet kiss for trial lawyers who will reap the benefits of more litigation and exorbitant payoffs from class action lawsuits.
The Bureau’s proposed rule would significantly increase costs, time-to-resolution, and the burden on our judicial system.
It may be a great deal for trial lawyers (like Saul), but it’s a bad deal for consumers.
Posted by on April 07, 2016
2. But then we realized that it’s 1,000 pages long. 1-0-0-0 pages…
6. And when the Administration’s own experts warned this rule could hurt more than help, the political appointees basically said, facts, schmacts.
8. We WILL fight to protect the retirement security and investment choices for all Americans.
9. And we WILL NOT let the Obama Administration deny millions of hardworking Americans access to reliable, affordable investment advice.