Blog

WEEK IN REVIEW
Posted by Staff on July 24, 2015
Committee Explores Appropriate Level of Capital and Liquidity

The full committee held a hearing to delve in to the issue of "too big to fail" and to hear from experts on the appropriate levels of capital and liquidity for U.S. banks to function properly and help foster economic growth.

"Since the crisis, U.S. banks have raised more than $400 billion in new capital and regulators have required institutions to maintain higher capital buffers -- again, under the authority they possessed pre-Dodd-FrankI for one believe that generally this to be a good thing. But the capital standards that were already complex have become even more complex with Basel III. I do not necessarily believe this to be a good thing," remarked Chairman Jeb Hensarling (R-TX) in his opening statement.

He continued, "There are a number of questions this committee must explore. One, again, although capital and liquidity standards have increased post-crisis, do we really know by how much? How opaque do balance sheets still appear? How many items that were once off balance sheet will find their way back onto balance sheets? What amount of capital is the proper amount? Too much, economic growth can stall. Too little and too many failures could yet ensue."

Rep. Sean Duffy (R-WI) noted lawmakers' acknowledgement of Dodd-Frank's clear failure to end "too big to fail." "It's fascinating listening to my friends across the aisle as they've grown over the last four and a half years. They started off telling us how Dodd-Frank was going to end 'too big to fail,' it was a sure fix to end 'too big to fail,' if you listen to the debates with former Chairman Frank. That was the reason why we have a 2,000-plus page bill, why we have 400 new rules. But the tone has changed. They're now admitting that Dodd-Frank in all of its sweeping reforms does not end 'too big to fail.'"


Subcommittee Reviews Proposals for Greater Accountability and Transparency at the Federal Reserve

On Wednesday the Monetary Policy and Trade Subcommittee held a hearing to review legislative proposals that would reform the Federal Reserve. These reforms would bring about a more transparent and accountable Federal Reserve in regard to its operations and decision-making in monetary policy.

"Last Congress, as we examined the Fed’s actions over the last 100 years through the Federal Reserve Centennial Oversight Project, it became clear that the Federal Reserve has gone above and beyond its original mission statement. In fact, since the enactment of Dodd-Frank, the Federal Reserve has gained unprecedented power, influence, and control over the financial system while remaining shrouded in mystery to the American people," said Subcommittee Chairman Bill Huizenga (R-MI). "The Fed must be accountable to the people’s representatives as well as to the hardworking taxpayers themselves."

Rep. Luke Messer (R-IN) spoke about the many Americans who are still suffering from the financial crisis and deserve to have an accountable and transparent Federal Reserve. "I think the American people look at all of what happened, and they understand. They don't know all the complexities but from their perspective, it looks something like this - there are a whole lot of rich people who are part of creating this crisis. The crisis happened and all those rich people are still rich, and the average working family is struggling. Their savings haven't improved. Their wages are flat, and they see a process that seems not very transparent, and they want to know who's accountable and responsible for it."


Task Force Considers Iran Nuclear Deal’s Implications on Financing Terrorists

The Task Force to Investigate Terrorism Financing held a hearing on Tuesday to examine the possible consequences of the Obama administration’s nuclear deal with Iran, part of which involves the lessening or removing of economic sanctions placed on Iran in the past.

“It appears this agreement fails to address the realities surrounding Iran’s sponsorship of terror, while further empowering its mullahs by infusing billions of dollars into its economy through lifting the sanctions that successfully brought Iran to the negotiating table in the first place,” said Task Force Chairman Mike Fitzpatrick (R-PA). “The Iranian regime has demonstrated a lack of concern about its own people, leaving little doubt the estimated $150 billion in funds currently held abroad will allow the Iranian economy to fully recover – not to the benefit of its oppressed citizens – but to the advantage of the next generation of terror syndicates.”

Rep. Ann Wagner (R-MO) also weighed in with her concerns about how the economic boost for Iran might lead to undesirable outcomes for the United States and its allies in the region. “The president has agreed to far-reaching concessions in nearly every area that was supposed to prevent Iran from acquiring a nuclear weapon. Under this deal, Iran would receive $100 billion to $150 billion in sanctions relief and regain access to conventional arms and ballistic missiles that has been denied for nearly a decade. Iran will be free to transfer these weapons, as has been stated, to Hezbollah, the Syrian government, Yemeni rebels, and other terrorist groups. These organizations threaten the security of the United States, our ally Israel, and the world, and will further destabilize a region already in crisis.”


Subcommittee Conducts Oversight of the National Credit Union Administration

The Financial Institutions and Consumer Credit Subcommittee held a hearing to examine the National Credit Union Administration's (NCUA) operations and budget. Credit unions have been shutting down in alarming numbers and unable to fully serve their customers' needs due to overwhelming federal regulations. In lights of these circumstances, Subcommittee Members questioned NCUA Chair Debbie Matz on how the agency allocates its budget and how their policies affect the fiscal health of credit unions.

“Credit unions in particular share a unique relationship with local communities. After all, they are cooperatives at their core. They help bring unserved and underserved customers into the financial mainstream. They provide that first credit card for young adults trying to build credit. They help the first-time homebuyer purchase the home they have been dreaming of," said Subcommittee Chairman Randy Neugebauer (R-TX) in his opening statement. “Unfortunately, credit unions, like community banks, are suffering from ‘one size fits all’ regulatory actions from federal regulators. For example, some credit unions now under go stress testing like their larger bank counterparts. Because of this increased regulatory burden and the related compliance costs, we have seen massive consolidation of credit unions and inflexible product standardization, which has limited consumer choice."

MEMBER SPOTLIGHT

Rep. Scott Tipton | Examining Dodd-Frank’s first five years
 
The regulatory burden under Dodd-Frank Act has imposed 61 million paperwork burden hours — at $24 billion in compliance costs — according to one calculation, with the hardest hit being small financial firms. During a visit to First Colorado National Bank, a locally-owned bank with a $50 million dollar portfolio in Delta, I heard first-hand how much of a toll this law has taken on banks that are the lifeblood of small communities’ economies. Instead of hiring tellers and loan officers, these banks are hiring compliance staff in order to keep up with new regulations. It is disappointing to hear that small bankers no longer feel like they run their bank, but that the federal government runs their bank for them.

To read other comments Committee Members issued this week on the harm caused by the Dodd-Frank Act, click here.

Weekend Must Reads


Wall Street Journal | Dodd-Frank’s Nasty Double Whammy

To limit abuse by the rulers, ancient Rome wrote down the law and permitted citizens to read it. Under Dodd-Frank, regulatory authority is now so broad and so vague that this practice is no longer followed in America. The rules are now whatever regulators say they are.

The Hill | Five years after Dodd-Frank, time for a course correction at CFPB

Most Americans don’t know about the existence of the CFPB, but Dodd-Frank’s out of control law enforcement agency is turning out to be perhaps the most powerful agency nobody has ever heard of. According to a USCC-Zogby Analytics poll in June, 2015, less than one in five Americans know the CFPB exists. From all indications, the CFPB would like to keep it that way.

Forbes | Dodd-Frank At 5 Years Old: Making The Next Crash More Likely And Worse When It Happens
 

You don’t reduce risk by concentrating it. What you’ve done there is concentrate risk.

    On the Horizon 

July 28, 2015 10:00 a.m.
Full Committee Hearing

"The Dodd-Frank Act Five Years Later: Are We More Prosperous?"

July 28, 2015 2:00 p.m.
Full Committee Markup

"Markup of H.R. 766, H.R. 1210, H.R. 1317, H.R. 1553, H.R. 1737, H.R. 1839, H.R. 1941, H.R. 2091, H.R. 2243, H.R. 2643, H.R. 2912, H.R. 3032, H.R. 3189, and H.R. 3192"

  In the News

The Hill | Hensarling: No more birthdays for Dodd-Frank

Pittsburgh Tribune | Dodd-Frank Turns 5: What a Mess

Chicago Tribune | Five Years Later, Dodd-Frank Still Falls Short

Miami Herald | Fix the Dodd-Frank Law

The Hill | Hensarling: Dodd-Frank made country 'less financially stable'

Wall Street Journal | House Republican’s Proposal Takes Aim at Fed Powers

American Banker | House Panel Debates Bills to Rein In Fed's Authority

Bucks County Courier Times | Fitzpatrick Referees Hearing on Iran Nuclear Deal

Northwest Arkansas Democrat Gazette | Hill wants details on money flow to Iran

Credit Union Times | Credit Unions Don’t Represent Their Members: Matz

Wall Street Journal | Raising Ex-Im From the Dead

Politico | Democrats’ New Cause: Dodd-Frank

Washington Examiner | Dodd-Frank at 5: Helping Big Banks Get Bigger

LA Times | Key Regulatory Job Created at Federal Reserve Still Vacant After Five Years

Orange County Register | Time to revisit Dodd-Frank banking restrictions

    Post a Comment
    Fill out the fields below to submit a comment