Patrick McHenryChairman

Washington, August 5, 2015 - Financial Services Committee Chairman Jeb Hensarling (R-TX) made the following statement after the Securities and Exchange Commission (SEC) voted today to finalize its CEO pay ratio rule. Last year, Chairman Hensarling along with Capital Markets and Government Sponsored Enterprises Subcommittee Chairman Scott Garrett (R-NJ) and Monetary Policy and Trade Subcommittee Chairman Bill Huizenga (R-MI) wrote a letter to SEC Chair Mary Jo White encouraging her and the Commission not to prioritize the completion of this controversial rule ahead of other much-needed rules, including many within the bipartisan JOBS Act.

“Under the Obama economic strategy of which Dodd-Frank is a central pillar, our anemic recovery has created 12.1 million fewer jobs than the average recovery since World War II. For more than a year now, the share of able-bodied Americans in the labor force has hovered at the lowest level in nearly 40 years. Small business startups are at the lowest level in a generation. This is simply unacceptable.

“That is why today’s 3-2 partisan vote is disappointing because it is the latest example of the SEC squandering its resources on rulemakings that do nothing to help small business startups and will instead harm U.S. companies and investors. The SEC has devoted thousands of man-hours and millions of dollars to finish rules mandated by the Dodd-Frank Act that neither address the causes of the financial crisis nor advance the SEC’s statutory mission.   Chair White prioritized this rulemaking to appease those that want a government regulator-controlled economy.  Instead of focusing on rules that would protect investors or facilitate capital formation for small and medium-sized businesses, Dodd-Frank decided to mandate disclosure rules that burden every U.S. public company that cost the economy billions of dollars without any material benefit.”

“When businesses attempt to comply with this rule, some will seek to make up those costs by reducing their workforce.   I’m guessing that a worker who loses his or her job will take little comfort in knowing the ratio between the CEO’s pay and the salary that they are no longer receiving because Dodd-Frank has put them out of work.”

“This fall, the committee will consider legislation to repeal this provision, H.R. 414.  Congress and the SEC must do more to reform the current regulatory regime which shuts small companies out of the U.S. capital markets. That is why the committee has passed 14 capital formation bills this Congress to help these companies grow and create jobs. These bills and the SEC’s full implementation of the JOBS Act are what will truly help us recover from this failed era of Obamanomics.”