Financial Services Committee
Committee Acts To Eliminate Provision In Dodd-Frank That Shut Down Segment Of Economy
Washington, Jul 20 -
During a markup today, the Financial Services Committee continued its effort to eliminate some of the job destroying provisions in the Dodd-Frank Act. In approving H.R. 1539, introduced by Rep. Steve Stivers, the Committee repealed Section 939G of the Dodd-Frank Act, which completely shut down the asset-backed securitization market shortly after Dodd-Frank’s enactment in July 2010. The legislation was approved by a vote of 31 to 19.
The Dodd-Frank Act applied expert liability to credit rating agencies. Like so many provisions of the Dodd-Frank Act, Section 939G was not the subject of a hearing and led to serious unintended consequences.
On July 22, 2010, the day after President Obama signed the Dodd-Frank Act, the credit rating agencies refused to consent to including their ratings in prospectuses and registration statements issued in connection with bond offerings. This led to a shutdown of the asset-backed securitization market. In order to restore this vitally important market, on the afternoon of July 22, 2010, the Securities and Exchange Commission immediately granted six months of “no-action” relief for registered offerings of asset-backed securities. On November 23, 2010, the SEC indefinitely extended the no-action relief.
The Asset-Backed Market Stabilization Act provides the certainty to ensure that the securitization markets continue to operate and provide credit to support Main Street businesses and the jobs they create. Indeed, according to a recent report by the Financial Stability Oversight Council, the securitization market “has improved the availability and affordability of credit to a diverse group of businesses, consumers, and homeowners in the United States.” By ensuring that the securitization markets function properly, Mr. Stivers said that “auto companies like the Honda manufacturing plant located in Marysville, Ohio, which employs 4,400 people and has the ability to produce around 440,000 vehicles each year, can finance more cars and create real jobs in my District and across the nation.”
Financial Services Committee Chairman Spencer Bachus said, “The Committee has taken an important step to permanently fix this provision of the Dodd-Frank Act that harmed our economy. America’s job creators are already struggling to obtain the credit they need to expand, invest and hire. The last thing they need are damaging policies like those in the Dodd-Frank Act that stand in the way of a recovery.”