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ICYMI: Derailing the American Dream since 2010: Thanks a lot, Dodd-Frank
“Under Dodd-Frank, the big banks have gotten bigger, the small banks have gotten fewer, and the taxpayer has gotten poorer.”

Washington, July 22, 2014 -


Published July 21, 2014
By Rep. Jeb Hensarling

President Obama promised the sprawling Dodd-Frank Act he signed four years ago this week would “lift the economy,” “end too big to fail,” “end bailouts,” and “increase investment and entrepreneurship.”

Instead, Dodd-Frank has done the opposite, making it harder for Americans to achieve their dreams for themselves and their families.

Supporters of Dodd-Frank said its 400-plus regulations were needed to fix the “deregulation” that caused the 2008 financial crisis. But regulations on the financial industry actually increased every year in the decade leading up to the crisis. Much of this red tape either required, incented or browbeat financial institutions into making loans to people to buy homes they could not afford to keep.

A great tragedy of the crisis was not that Washington regulations failed to prevent it, but helped lead us into it.

Under Dodd-Frank, the big banks have gotten bigger, the small banks have gotten fewer, and the taxpayer has gotten poorer.

Dodd-Frank is every bit as far-reaching in its harmful consequences as ObamaCare. Like ObamaCare, with Dodd-Frank we see once again Democrats in Washington dictating the choices individuals can make, commanding the operations of businesses, and harming our ability to compete.

With its creation of new bureaucracies on top of an already balkanized, overly-complex regulatory structure, Dodd-Frank grants an extreme level of power to Washington bureaucrats that is more appropriate for a government controlled economy than one built upon freedom, free enterprise and free markets.

Rather than benefiting American consumers and workers, the law has unintended consequences on every one of its 2,300 pages.

Thanks to the Consumer Financial Protection Bureau’s Qualified Mortgage rule, Dodd-Frank makes it harder for low and moderate-income Americans to buy a home. According to a Federal Reserve study, roughly one third of African-American and Hispanic borrowers would not be able to obtain a mortgage based solely on the CFPB’s debt-to-income requirements.

Because of Dodd-Frank’s crushing regulatory burden, there are fewer community financial institutions serving the needs of small businesses and families. Under Dodd-Frank, the big banks have gotten bigger, the small banks have gotten fewer, and the taxpayer has gotten poorer. Consumers have less access to credit and to financial products and services they want and need.

The new “end user” margin requirements imposed by Dodd-Frank mean Main Street businesses and farmers face higher costs in managing their risk. These costs are passed on to consumers and felt directly by every American family when they sit down at the kitchen table.

Dodd-Frank’s Volcker rule makes U.S. capital markets less competitive against other international financial centers. It’s more expensive for U.S. companies to raise working capital and harder for Americans saving for retirement or their children’s college educations.

Dodd-Frank created the Financial Stability Oversight Council and gave it the power to designate certain large businesses as “Systemically Important Financial Institutions” (SIFIs). Now insurance companies that pose no discernible systemic risk to the economy are being subjected to unnecessary regulation that dries up capital for infrastructure projects, and harms investors and policy-holders.

Rather than ending bailouts, Dodd-Frank entrenches bailouts as official government policy. In the words of Richard Fisher, the President of the Dallas Federal Reserve Bank, “SIFIs occupy a privileged position in the financial system.” They are “viewed by the market as being the first to be saved by the first responders in a financial crisis.”

Thanks to Dodd-Frank’s Durbin amendment, services that bank customers once took for granted like free checking are being curbed or eliminated.

Dodd-Frank is one of the linchpins of an Obama economic strategy that has brought America the slowest, weakest non-recovery recovery since the Great Depression. 

Never before in my lifetime do I remember a time when the challenges of upward mobility and economic opportunity have been greater. Not surprisingly, I also do not ever recall a time when the red tape burdens on our job creators and capital markets have been greater.

Whether it’s Dodd-Frank, ObamaCare or the IRS, the heavy burden of Washington regulations is choking our economy and the ability of employers to hire more workers.

The numbers tell the story: 16 million Americans unemployed or underemployed; the smallest percentage of workers in our labor force in three decades; and small business start-ups at the lowest level in 20 years.

Dodd-Frank and the rest of Washington over-regulation help explain why the U.S. economy today is $1.6 trillion smaller than what an average economic recovery over the last 50 years looks like. This lackluster performance explains why a family of four today is missing more than $1,100 in after-tax income and why there are nearly 6 million fewer jobs compared with the average recovery.

The answer is less Dodd-Frank, less red tape and more free enterprise and economic freedom. 

Free enterprise has lifted more people out of poverty than all the government anti-poverty programs combined. It is the only economic system that frees ordinary people to achieve extraordinary results.

In the Financial Services Committee, we’ve focused on passing initiatives that make it easier to create jobs so more Americans can find work. So far, more than 20 of these jobs bills that have come out of our committee have passed the House with bipartisan support. 

Among them are bipartisan bills to repeal Dodd-Frank regulations that make it harder to invest in small companies; to streamline rules so it’s easier for small business owners to sell their enterprises rather than close them up when they retire; and to require federal agencies to undertake a thorough cost-benefit analysis of proposed rules and choose the lowest cost alternative.

We’re advancing solutions to reduce red tape, help small businesses grow and expand opportunity for everyone. Many of these bipartisan bills relieve Main Street from burdensome Dodd-Frank regulations that we were told would apply only to Wall Street. But like dozens of other House-passed bills, they are stuck in the Senate.

If President Obama is serious about helping low and middle-income Americans, he will use his pen and phone for something other than executive power grabs. He will use them to call on Senate Democrats to get to work and do their part.


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