A Financial Services Subcommittee hearing on Tuesday, July 10 will focus on how the Dodd-Frank Act's rules and red tape make it harder for American companies to raise capital, hedge risks and obtain credit -- activities that are necessary for businesses to grow and hire workers.
The hearing before the Capital Markets and Government Sponsored Enterprises Subcommittee will focus particularly on the impact the Act's derivatives provisions and Volcker Rule will have on job creators, consumers and investors.
Financial Services Committee Chairman Spencer Bachus noted that while the Dodd-Frank Act was portrayed by its supporters as "Wall Street reform," the law is having an impact on businesses and individuals far from Wall Street.
"If businesses find it harder to borrow, it will be harder for them to make capital investments and create jobs; if consumers have less access to credit, it will be harder for them to care for their families; and if the value of the assets held by savers and investors declines, people will find it harder to save for a new home, for college or retirement," Chairman Bachus said.
Capital Markets and Government Sponsored Enterprises Subcommittee Chairman Scott Garrett said, "In order to get people back to work and the economy humming again, our financial institutions must be able to raise capital and consumers and small businesses must have access to credit. This hearing will examine the stranglehold Dodd-Frank and its regulations are having on America's job creators and consumers."
At Tuesday's hearing, the Subcommittee will examine how the derivatives provisions of Dodd-Frank will affect thousands of non-financial businesses across the nation. Derivatives are used by the country's leading non-financial companies, by farmers and ranchers, as well as by state and local governments, to manage risks. For example, farmers use derivatives to lock in the prices of their crops for the coming season. Companies large and small use derivatives to manage their exposure to risks such as fluctuations in interest rates and exchange rates.
Similarly, the Dodd-Frank Act's Volcker Rule will have consequences far beyond Wall Street. Implementing the Volcker Rule has proven to be a difficult and complicated undertaking. The draft rule released by financial regulators last October spans 298 pages and includes more than 1,300 questions seeking comment from market participants on nearly 400 topics. If the final rule does not clearly distinguish prohibited proprietary trading from permissible "market making" activities, many warn it will result in higher rates on mortgages and credit cards for consumers, reduced credit availability for businesses, and fewer jobs for everyone.
July marks the two-year anniversary of the Dodd-Frank Act being signed into law. Throughout the month, the Financial Services Committee will hold hearings to examine the law's aftermath and the effect its more than 400 new rules will have on the economy, jobs and consumers. Since January 2011, the Committee has held 62 hearings to identify provisions of Dodd-Frank that kill jobs and make it more expensive and more difficult for consumers and American companies to obtain credit. The Committee has heard from more than 340 witnesses at these hearings.
Tuesday's Subcommittee hearing, "The Impact of Dodd-Frank on Consumers, Credit and Job Creators," will begin at 10 a.m. in room 2128 Rayburn House Office Building.