By Rep. Steve Scalise
We are five years out from one of the worst financial crashes since the Great Depression. During the crash several banks were identified as "too big to fail" and Congress approved $700 billion to bail them out. Shortly after passage of the bank bailout, the Obama Administration stepped up the populist rhetoric in anticipation of an extreme power grab over the private sector.
In 2010, Washington's political class hastily put together and passed one of the most overly burdensome regulatory regimes our nation has ever seen. This bill, commonly known as Dodd-Frank, was signed into law by President Obama who promised, "there will be new rules to make clear that no firm is somehow protected because it is "too big to fail."
Predictably, that promise was broken, as the high costs of regulatory compliance have caused banks to further consolidate. Rather than reverse the trend, Dodd-Frank has enshrined the concept of "too big to fail." The President promised, "the American people will never again be asked to foot the bill for Wall Street's mistakes." Now, instead of calling banks "too big to fail" the regulators describe them as "Systemically Important Financial Institutions." Different names but the concept is the same. Taxpayers are still on the hook for billions of dollars in the event of another meltdown.
Many of the harmful effects of Dodd-Frank have been passed on to consumers and are felt way beyond Wall Street. America's rural communities depend upon community banks and credit unions. Under Dodd-Frank, these financial institutions, who had nothing to do with the financial collapse, must comply with hundreds of new rules that endanger their ability to remain in business. Furthermore, these institutions and consumers have yet to feel the full crushing weight of Dodd-Frank because less than half of the radical regulations have been implemented.
In addition, Dodd-Frank created an incredibly powerful and unaccountable agency known as the Consumer Financial Protection Bureau ("CFPB"). Politicians who rammed through Dodd-Frank created an agency that is virtually exempt from the oversight and checks and balances that normally apply to government agencies. This new agency has been collecting troubling amounts of consumer data and is currently being investigated by the Government Accountability Office for this practice.
The bill, which is over 2,500 pages, is designed to be too complex for anyone other than the Administration "experts" who wrote it to understand. The lawmakers who wrote Dodd-Frank gave heavy-handed powers to unaccountable, unelected regulators.
Americans deserve a better system. Until radical laws like Dodd-Frank are repealed and replaced with common-sense reforms that prevent future bailouts, our economic recovery will continue to be held back by Washington's regulatory overreach.
Rep. Steve Scalise (R-LA-01) is Chairman of the Republican Study Committee (RSC), and a member of the Energy and Commerce committee.