Fixing Provisions In Dodd-Frank That Are Hindering An Economic Recovery
As the nation’s economy continues to struggle, the Committee continues its work on reviewing the Dodd-Frank Act page-by-page to identify and fix its job-crushing provisions.
Many of the job-crushing provisions were the result of a rushed conference committee. The conference committee on regulatory reform met during a two week period in order to meet an arbitrary deadline. At the end of the conference Committee, the Dodd-Frank Act spanned 2,300 pages. Yet, the massive 2,300 pages, was silent on the real causes of the financial crisis. There was no plan for Fannie Mae and Freddie Mac. There was no end to the bailouts. In short, the government’s response to the financial crisis, mainly AIG-style bailouts, were made permanent in those 2,300 pages.
As a result of the debate that was rushed, there was no consideration on the cost of creating massive new bureaucracies and a permanent bailout fund. In fact, there was no debate on the potential impact of any of the provisions.
This year, the Committee finally received two reports from the GAO and CBO evaluating the cost of Dodd-Frank. These two independent, nonpartisan agencies confirm Dodd-Frank means more bureaucracy and higher government spending. Highlights from the two reports include:
ü $27 billion will be taken out of our economy because of Dodd-Frank
ü 2,600 new full-time Federal employees will have to be hired to implement Dodd-Frank
ü The cost to the taxpayers of these new Federal workers is $3 billion over five years
The Committee has proposed four bills to promote job creation, economic growth and capital formation.
1. The Asset-Backed Market Stabilization Act, introduced by Representative Steve Stivers, removes a provision in Dodd-Frank that temporarily shut down the asset-backed securities market. The Dodd-Frank Act included a liability provision for credit rating agencies if their ratings were determined to be inaccurate. Within days of the Dodd-Frank Act becoming law, this liability provision temporarily shut down the asset-backed securities market, forcing the Securities and Exchange Commission (SEC) to step in and issue a temporary no-action letter on July 22, 2010. On November 23, 2010, the SEC issued a permanent no-action letter. The Asset-Backed Market Stabilization Act provides certainty to the issuers of asset-backed securities by repealing the liability provision.
2. The Small Business Capital Access and Job Preservation Act, introduced By Representative Robert Hurt, exempts advisers to private equity funds from the registration requirements under Dodd-Frank. The Financial Services Committee has received testimony regarding the role private equity firms play in preserving existing jobs and creating new ones by providing capital to struggling and growing companies.
3. The Business Risk Mitigation and Price Stabilization Act, introduced by Representative Michael Grimm, provides a real exemption for non-financial businesses that use derivatives to manage risk. The Dodd-Frank Act requires derivatives transactions to be cleared through a registered clearing house, and exempts swaps and security based swaps from this clearing requirement if one of the counterparties is not a financial entity.
4. The Burdensome Data Collection Relief Act, introduced by Representative Nan Hayworth, removes a provision in Dodd-Frank that was added without any debate to require publicly traded companies to disclose their median annual total compensation of all employees. Two months after the Dodd-Frank Act was signed into law, the Financial Services Committee received testimony about the enormous burden and complexity this provision poses to publicly traded companies, with very little, if any, corresponding benefit to investors.
All of these bills were approved by the Capital Markets and Government Sponsored Enterprises Subcommittee on May 4th. The bills will now be sent to the Full Committee for consideration.
This page will be updated as additional legislative action takes place.