WEEK IN REVIEW
April 15, 2016 -
Holding Bureaucrats Accountable and Helping Main Street Grow
Two committee priorities – holding Washington accountable and growing Main Street’s economy – were on the House floor this week in the form of Rep. Tom Emmer’s (R-MN) “Financial Stability Oversight Council Reform Act” and Rep. Mia Love’s (R-UT) regulatory relief bill for small community banks. Both passed the House and now head to the Senate.
The “Financial Stability Oversight Council Reform Act” makes two Dodd-Frank Act-created bureaucracies -- FSOC and the Office of Financial Research (OFR) -- accountable to hardworking taxpayers by making them subject to the normal and transparent appropriations process.
“I am a firm believer in a transparent and accountable government, and if a federal institution is failing to meet these fundamental criteria, Congress needs to fix it,” said Rep. Emmer. “Unfortunately, FSOC and OFR currently operate in the shadows, outside of the usual congressional oversight and the democratic process. I cannot stand by while businesses that had nothing to do with the 2008 financial crisis are being unjustly burdened with new regulations that result in Americans paying higher prices for essential financial products like home mortgages, as well as education, auto and business loans.”
H.R. 3791 sponsored by Rep. Love is a much needed regulatory relief and economic growth bill that will help small community banks raise capital and serve their customers.
“My bill is not about supporting banks. It’s about people. This bill is about giving people the credit they need to pursue their dreams…to get a car, a home, or start and grow their business,” said Rep. Love.
“Wouldn’t it be nice to hear for a change that community banks are once again hiring new loan officers to serve their communities as opposed to more regulatory compliance officers to serve their Washington masters? That’s how you help capitalize more small businesses and help families pay their bills, plan for the future, and achieve the dream of financial independence,” said Chairman Jeb Hensarling (R-TX) during debate on the House floor.
Committee Approves Legislation to Require Agency Accountability and End Taxpayer Bailout Fund
On Wednesday, the Committee approved bills to repeal Dodd-Frank’s bailout authority and to make the CFPB accountable to taxpayers by putting its spending on budget.
The bill to repeal Dodd-Frank’s bailout authority passed 34-22. The bill, sponsored Rep. Lynn Westmoreland (R-GA), repeals Title II of Dodd-Frank, which has made bailouts a permanent fixture in the regulators’ toolkit. Under Title II, the FDIC can borrow from the Treasury to lend to a failing firm, purchase its assets, guarantee its obligations and pay off its creditors. Earlier this week, the House passed overwhelmingly bipartisan legislation, which creates a new bankruptcy chapter for failing banks.
“Title II is another bureaucratic nightmare within Dodd-Frank, which uses big government as the solution to our financial problems,” Rep. Westmoreland said. “It continues the ‘Too Big to Fail’ model which allows firms, their creditors, and counterparties to receive a government bailout at the taxpayer’s expense.”
Rep. Andy Barr (R-KY) sponsored the “Taking Account of Bureaucrats’ Spending (TABS) Act, which passed the committee 33-20. The bill reaffirms Congress’ constitutional power of the purse in relation to the CFPB.
“We know from testimony and by statutory design the Bureau is not subject to accountability to the American people through the representatives in Congress,” said Rep. Barr. “There may be good-natured disagreement about the nature and scope of the Bureau's mission, but surely we can agree that the Bureau, particularly with regard to its spending, should be accountable to someone. In testimony before this committee, both Director Cordray and Federal Reserve Chair Janet Yellen have repeatedly attested to the fact that the Bureau's budget is not subject to review or approval in whole or in part by the Fed. There is no signoff. There is no oversight by anyone.”
“Every government agency should be accountable to the elected representatives of ‘We the People’ and the CFPB should not be an exception to that rule,” said Chairman Hensarling.
The JOBS Act at 4
Four years after Congress passed the bipartisan Jumpstart Our Business Startups (JOBS) Act, the Subcommittee on Capital Markets and Government Sponsored Enterprises held a hearing on Thursday to examine the law’s economic benefits and what more Congress needs to do to help grow new businesses.
“It’s not very often that Congress can look back at a major piece of legislation and be able to measure the tangible, positive impact it is having on peoples’ lives and on our economy,” said Subcommittee Chairman Scott Garrett (R-NJ). “The JOBS Act did this not by creating new federal mandates or spending taxpayer money on wasteful programs, but by empowering entrepreneurs and innovators who were struggling under a regulatory regime that was better suited for 1934 than it was for 2016.”
Among the JOBS Act’s accomplishments so far:
- 85% of IPOs since April 2012 have come from emerging growth companies
- Companies have raised some $50 billion under the new Reg D provision that allows business to solicit an offering to the general public
- While the newly modernized Reg A+ is only a year old, business are already beginning to issue securities under this exemption
- Reports indicate the SEC has already received up to 30 applications for portals under the new crowdfunding rules, which are set to go live next month
The subcommittee also discussed four legislative proposals to further enhance capital formation:
- H.R. 4850, the "Micro Offering Safe Harbor Act"
- H.R. 4852, the "Private Placement Improvement Act of 2016"
- H.R. 4854, the "Supporting America’s Innovators Act of 2016"
- H.R. 4855, the 'Fix Crowdfunding Act"
Rep. Scott Garrett (R-NJ)| SEC Should Stop Standing in the Way of JOBS
As one-size-fits-all regulation and top-down mandates continue to strangle our economy, the Jumpstart Our Business Startups (JOBS) Act of 2012 has proven to be a breath of fresh air. This truly bipartisan accomplishment that I helped shepherd through Congress has led a resurgence in the initial public offering market and allowed more companies to raise capital through private channels. Simply put, the JOBS Act opens doors for capital to flow into growing and innovative businesses.
Rep. Lynn Westmoreland (R-GA)| Viewpoint: MetLife ruling a devastating blow to Dodd-Frank bureaucratic nightmare
Washington bureaucrats, overreaching regulations, and unsubstantiated labels: that’s been Dodd-Frank’s M.O. for the last six years. These truths were reinforced by U.S. District Judge Rosemary Collyer’s two-page order this week in the case of MetLife Inc. v. Financial Stability Oversight Council. Judge Collyer’s ruling in favor of MetLife delivered a devastating blow to Dodd-Frank’s “too big to fail” designation process.
Weekend Must Reads
Wall Street Journal | Dodd-Frank in Retreat
It’s been a rough few weeks for President Obama’s signature reform of American finance. Across Washington deep cracks are appearing in the foundations of the Dodd-Frank law Mr. Obama enacted in 2010.
The Daily Caller | Fed Judges Question Constitutionality Of Obama’s Prized Consumer Agency
A federal appeals court appears ready to declare the structure of the Consumer Financial Protection Bureau (CFPB) unconstitutional, a major blow to the first new agency created under President Barack Obama.
The Daily Signal | Senators Lobby Consumer Bureau in Letter That Appears to Be Written by Agency’s Own Adviser
The Daily Signal has obtained a draft letter from two Democrat senators urging the Consumer Financial Protection Bureau to continue addressing what they call “discriminatory and unfair lending practices” in the auto industry.
Washington Times| Reining in a rogue bureau
A federal appellate court questioned Tuesday whether the structure of the Consumer Finance Protection Bureau (CFPB) violates the constitutional separation of powers. That question has been on the minds of constitutional scholars and administrative lawyers ever since the Dodd-Frank Act brought forth this Frankenstein agency, which wields all the power and jurisdiction once exercised by seven separate agencies over great swaths of the economy, all without any meaningful oversight by the political branches.
On the Horizon
Tuesday, April 19, 2016 at 10:00 A.M
Task Force to Investigate Terrorism Financing
“Preventing Cultural Genocide: Countering the Plunder and Sale of Priceless Cultural Antiquities by ISIS”
Thursday, April 21, 2016 at 9:15 A.M.
Capital Markets and Government Sponsored Enterprises
“Continued Oversight of the SEC’s Offices and Divisions”
In the News
Wall Street Journal| GAO Criticizes Fed, FDIC on Living Wills
American Banker| House Panel Approves Bills Overhauling Key Dodd-Frank Reforms
Wall Street Journal| House Republicans Criticize Fiduciary Rule — With Seinfeld GIFs
The Hill| GAO: Regulators should make 'living will' criteria public
Morning Consult| Hensarling, Duffy Press Regulators for Source of Living Wills Leak
The Hill| House panel passes bills to ramp up CFPB oversight
Housing Wire | House Financial Services Committee approves bill to rein in CFPB budget
Washington Examiner | House passes bill to add section to bankruptcy code for banks
American Banker | CFPB Gets Pummeled in Court Hearing on Constitutionality