Economists at a prominent think tank based in Washington, D.C. last week reported that a full repeal of the Dodd-Frank Wall Street Reform and Consumer Protection Act would boost the economy by 1 percent and generate $340 billion in federal revenue over a 10-year period.
Dodd-Frank, as it is called for short, was passed by the Democrat controlled Congress and signed into law by President Barack Obama in 2010. At more than 2,000 pages, the law is the most sweeping financial regulation enacted since the Great Depression.
It was sold to the American public as a Washington crackdown on greedy Wall Street banks that put the U.S. economy into a tailspin. Crafty messaging professionals created an advertising gimmick in the title of the law itself.
But as the saying goes: You can’t judge a book by its cover.
Rightfully, at the time, the American people wanted their government to respond to an economic collapse — and it did. The problem was that the action that was taken did too little to prevent history from repeating itself and too much to hurt the little guys that were in no way responsible for the Great Recession.
In our home state of Texas, since Dodd-Frank’s implementation, community banks have closed their doors and no new banks have been chartered. Considering most small businesses, which represent 99.7 percent of all U.S. businesses, rely on local lenders to expand, create jobs and conduct further research and development, Dodd-Frank has, and will continue to have, negative effects on the U.S. economy.
In a recent op-ed in The Hill, those same think-tank economists wrote, “There is good reason to believe (Dodd-Frank) may also increase the frequency and severity of recessions and may diminish innovation in the financial sector and elsewhere.” Simply, Dodd-Frank was the wrong prescription for our nation’s troubled financial sector.
That is why my colleagues and I on the House Financial Services Committee have a plan that will actually prevent a similar financial collapse from happening again while lessening the current overregulation of Main Street.
Our Dodd-Frank replacement — the CHOICE Act — will impose the toughest penalties in history for financial fraud and will once and for all end taxpayer funded bank bailouts.
The CHOICE Act will force more accountability on both the banks on Wall Street and on the bureaucracies in Washington that have forced unnecessary, costly compliance measures on mom-and-pop shops throughout the country. Washington’s regulators will be accountable to members of Congress rather than being allowed to make decisions without any repercussions from American voters.
In a recent piece that I wrote with U.S. Sen. David Perdue, we said that legitimate oversight over the financial sector is important. Very few — if any — lawmakers will disagree with this sentiment.
Today, the federal government is wrongly deflecting blame to smaller financial institutions that should not be required to meet arbitrary compliance measures that are forcing them out of business. The CHOICE Act will correct that and actually punish bad actors who wreak havoc on the livelihoods of everyday, hard-working Americans.
Williams, an Austin Republican, serves on the Financial Services Committee in the U.S. House of Representatives. He is the vice-chair of the subcommittee on Monetary Policy and Trade.