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House Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at a hearing with the Federal Reserve’s Vice Chairman for Supervision Randal Quarles:
Today, we are very, very pleased to welcome the Honorable Randy Quarles, Vice Chairman of Supervision for the Fed. We have been waiting, Mr. Quarles, eight years for your arrival—we’d like to know what took you so long. I think what we know is under Dodd-Frank, the statute says the President shall, shall appoint a Vice President of Supervision, not may—and yet, President Obama refused to. We all know that Governor Tarullo de facto filled the position, but he did it without oversight and without checks and balances. Fortunately, President Trump has a very different view of the statute, the constitution, and respect of Congress.
We all know that today, Governor Quarles is appearing on tax day. We also know that, thanks to the president and Republican Congress, we now have a 3% growth tax code. We know that 90% of all Americans are now receiving better take-home pay because of this, and people are seeing pay increases, 401k increases, and job expansion all over the nation. That’s the good news.
We may have a 3% growth tax policy in America but we do not yet have a 3% capital markets and banking policy in America, and we need one. Three percent growth makes a huge difference in the lives of our countrymen.
Since the time that I have been on the face of the planet, a little over half of the years have seen 3% growth and a little less than half of the years have seen less than 3% growth. In those years that have seen 3% growth—four-fifths of all the jobs that were created in my lifetime were created in 3% growth years, poverty fell by almost three-quarters and real median household income rose by approximately $20,000. In the years since I was born where the economy grew less than 3%, only one-fifth of the jobs were created, the poverty rate rose by over a third, and household income fell by over $10,000.
For the average family in America, 3% growth is the line of demarcation which determines whether all their work and sacrifice for the year will actually translate into getting ahead, so it’s important that we get it right.
We all know that Dodd-Frank – regardless of what it may have done for financial stability – is, perhaps, the most complex, costly, confusing regulatory onslaught onto our capital markets that we have seen. Many market participants, in fact, believe that it has cut ½ to 1% of GDP. That’s why, Governor Quarles, we very much welcome your call for efficiency, transparency, and simplicity in regulation because we also know that, in a post Dodd-Frank world, the Fed is now our über financial regulator. I particularly appreciate your call for efficiency to make sure that “the net cost of regulation – whether in reduced economic growth or in increased frictions in the financial system – is outweighed by the benefits of the regulation,” to quote you. I look forward to hearing more in your testimony.