financialservices.house.gov

Cmte Financial Services (R)
Contact:


Washington Examiner: Don't relitigate Dodd-Frank when there are newer, more pressing financial challenges
By: Patrick McHenry

Washington, Apr 10 -

On Wednesday, for the first time in 10 years, the CEOs of America’s largest banks will appear before Congress to testify at the Financial Services Committee. The last time these banks were assembled before the committee, Chairman Barney Frank, D-Mass., sat atop the dais and the economy had just suffered its biggest shock since the Great Depression. Our financial services industry and consumers were trying to regain their footing and make sense of it all. Not long after, Frank and Democrats were celebrating passage of the Dodd-Frank Act, the most intrusive and expansive set of regulations experienced by our financial system since the Great Depression.

In the intervening years since Dodd-Frank’s passage, the Democrats appear to have buyers’ remorse with their creation. With more than 400 regulations issued to date, it’s hardly surprising that there have been major unintended consequences. Yet instead of working to unwind the anti-competitive policies they embraced, Democrats continue to use their bully pulpit to browbeat the remaining market participants.

We must, however, be mindful to not let the systemic issues facing our financial markets and economy get lost in the bright light of the partisanship and finger-pointing that has come to define Washington. Instead of relitigating the Dodd-Frank debates of the last decade, we must focus our attention on the very real challenges facing our markets.

At the top of the list of issues is determining how well our largest banks are prepared for the British exit from the European Union. With more than $450 trillion in U.S. financial service products flowing through the United Kingdom, American regulators must work with market participants to be prepared for any one of the potential Brexit outcomes. Our regulators also must be mindful of the role the EU’s uncertain economic growth and the weakened state of EU continental banks will play in this new framework.

With four of the 10 largest banks in the world, China’s banking system claims an oversized role when we assess global systemic risk. Last week, their onshore debt markets were listed for the first time on an American Global Index allowing for investors to easily invest in Chinese bonds. This, in turn, is expected to increase demand for the yuan worldwide, creating additional concerns given the well-documented, recent history of Chinese currency manipulation. It is crucial that we do not let American interests be overshadowed by the growth of China’s financial markets.

Last but certainly not least, cybersecurity is an ever-growing issue with attacks coming from rogue nation-states and nefarious actors. The financial sector’s reliance on data and information makes them a prime target of cyber attacks. This demands vigorous efforts to both repel attacks and quickly identify when breaches occur. One in every four organizations has a data breach, and given the harm these breaches have on consumers, this issue must receive the attention it deserves from policymakers. To remain competitive, financial institutions need to embrace innovation and have the freedom to develop beneficial partnerships with new technologies. At the same time, we must remain vigilant in always staying one step ahead of bad actors.

These issues are not partisan in nature. Chairwoman Maxine Waters, D-Calif., spoke to this exact issue in a Financial Services hearing in 2015 stating, “efforts to guard against cyber threats are critically important and shouldn’t devolve into the same partisan fault lines we’ve seen on far too many issues.” I agree, wholeheartedly.

We can find common goals to address cybersecurity and the plethora of systemically important market challenges if we work together at the committee. When people tune in to Wednesday’s hearing, you will find Republicans ready to meet this challenge.

Rep. Patrick McHenry, a Republican, represents North Carolina's 10th Congressional District. He serves as the ranking Republican on the House Financial Services Committee. You can follow him on Twitter: @PatrickMcHenry