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WEEK IN REVIEW


Washington, Dec 9 -

Subcommittee Reviews Regulatory Impact on Short-Term Financing

The Capital Markets and Government Sponsored Enterprises Subcommittee held a hearing on Thursday to consider the impact regulatory activities since 2010 have had on short-term financing in the U.S. capital markets, including repurchase agreements, money market funds, and securities financing.

Chairman Scott Garrett (R-NJ) said, “It’s clear that Main Street is feeling the impact of the hundreds of new rules heaped upon our economy over the last few years.  This hearing will be an opportunity to look specifically at short-term financing markets, and the impact that the Volcker rule, Basel liquidity and capital rules, and the SEC’s money market fund regulations are having on Main Street businesses and municipalities in accessing the financial markets.”

Witnesses testifying before the Subcommittee said the growing red tape burden is harming the economy and prospects for growth.

“We feel strongly that several recent financial regulations such as Dodd-Frank, Basel III, Money Market Fund regulations and many more, both alone and in concert with each other, have triggered regulatory and compliance cost burdens that radiate through the economy. Ultimately, this is choking the U.S. economy and paralyzing American businesses and financial companies that had nothing at all to do with the financial crisis, said Anthony J. Carfang of Treasury Strategies.

Thomas C. Deas, Jr., Chairman of the National Association of Corporate Treasurers, testified that “the onslaught of new financial regulations since the financial crisis” have tightened the markets for short-term borrowing, “resulting in more volatility, wider spreads, and higher rates. Corporate treasurers have faced increasing difficulty managing liquidity without tying up productive capital or incurring additional substantial financing and hedging costs.”

Fed’s Unconventional Monetary Policy Gets Subcommittee’s Attention

The Monetary Policy and Trade Subcommittee held a hearing on Wednesday to examine the Federal Reserve’s departures from conventional monetary policy and how a more principled and transparent monetary policy strategy can better support economic growth going forward. By stepping well beyond the bound of simply facilitating commerce wherever it shows promise, unconventional monetary policy is distorting investment decisions and weakening economic performance.

“A decade of economics-free monetary policy is not working because it cannot work. Returning to a robust economy requires a more firmly grounded and transparent policy,” said Subcommittee Chairman Bill Huizenga (R-MI). “That transition cannot happen until the Fed shrinks its balance sheet, brings interest rate and credit risks out of the bureaucratic shadows.”

House Passes Transparency Bill for International Regulatory Discussions

The Transparent Insurance Standards Act was passed by the House on Wednesday by a vote of 239-170. This legislation, sponsored by Housing and Insurance Subcommittee Chairman Blaine Luetkemeyer (R-MO), directs federal regulators to solicit public comments, consult with state officials, and report to Congress before adopting international capital standards or other requirements for U.S. insurance companies.

In its coverage of the bill’s passage, Bloomberg reported that “Republican lawmakers say the bill is necessary to ensure U.S. federal regulators, who have less experience in insurance regulation than states do, are not swayed to vote for EU-based IAIS (International Association of Insurance Supervisors) standards that disadvantage U.S. companies or consumers to simply advance global relations.”

Chairman Luetkemeyer said the bill “will serve as leverage to make sure that we are able to export U.S. standards rather than import other ones.”

On the floor, Chairman Hensarling urged support of the legislation, “H.R. 5143 provides greater transparency, it allows for a stronger Team USA in negotiations, it sends a signal to foreign governments and international organizations that the U.S. again will lead and not be led into bad agreements. With the greater congressional oversight the bill provides, we can ensure that any deal that is reached will be a fair deal and a good deal for the American people.”

MEMBER SPOTLIGHT

Rep. Keith Rothfus (R-PA)
| Dodd-Frank Must Go. Here’s the Republican Plan to Save Community Banks, Spur Economic Growth.

With control of both the White House and Congress, Republicans finally have the opportunity to reignite the economy.  American families and workers have been waiting for eight long years for a return to healthy economic growth and opportunity, and congressional Republicans are ready to deliver with the Financial CHOICE Act.

Weekend Must Reads

American Action Forum | Undoing Dodd-Frank in 2017?

Dodd-Frank has already imposed more than $36 billion in costs, with 74 million hours of paperwork that Americans must complete annually. It’s clear Congress and the next administration seek reform of the nation’s financial services industry in a manner the protects the security of the system, while lowering regulatory costs and encouraging investment.

Wall Street Journal | Banks to Donald Trump: Don’t Kill Dodd-Frank

Big banks have an unexpected message for President-elect Donald Trump: Don’t trash the Dodd-Frank Act.

IJ Review | President Trump Should Reform The Consumer Financial Protection Bureau

With the election of Donald Trump, there is no better time to tackle regulatory reform—one of the greatest obstacles to entrepreneurship, innovation, and job creation. One recent study found that the total cost of federal regulations is $4 trillion.

In the News

Wall Street Journal | Donald Trump’s Cabinet Selections Signal Deregulation Moves Are Coming

Politico Pro | House passes international insurance bill, defying White House

American Banker | CFPB on Collision Course with Trump's Justice Department

Morning Consult | Huizenga: Dodd-Frank Replacement Will Reflect Unified GOP Government

American Banker | Trump vs. Cordray: The Battle Ahead

Wall Street Journal | Trump Versus Cordray: Can New President Fire CFPB Chief on Day One?

Politico | 4 big areas where Steven Mnuchin could change policy at Treasury