By Robert Hurt
Five years ago, the president signed the Dodd-Frank Act into law, touting that it would stabilize our economy and hold accountable those responsible for the financial crisis of 2008. This law was sold to the American people as an end to “Too Big to Fail” and taxpayer-funded bailouts. Indeed, Dodd-Frank made noble promises.
But in practice, this 2,319-page law has not fulfilled these worthy ambitions. In fact, it has done quite the opposite — it has inflicted harm on the American people. Throughout the month of the July, the House Financial Services Committee, on which I serve, has conducted a series of hearings to examine the wide-ranging impacts of this massive law.
Among our many findings, we have seen how Dodd-Frank has been detrimental to our community banks, which in turn has serious, crippling effects on our small businesses and rural communities. Dodd-Frank has forced one-size-fits-all regulations, intended to rein in bad actors on Wall Street, on our smaller financial institutions.
Community banks should not be regulated in the same fashion as large institutions since they are not deeply involved in the capital markets or the securitization marketplace. Their competitive advantage lies in their intimate knowledge of their customers and their ability to be more flexible given their understanding of their community. Dodd-Frank ignores this concept and instead transforms our regulatory system to reflect big bank system and processes rather than empowering community banks to engage in the relationship-banking that helps smaller communities thrive.
Dodd-Frank also expanded the Federal Reserve’s authority to intervene in our financial sector. Last week, Federal Reserve Chair Janet Yellen testified before the Financial Services Committee to discuss the state of the economy and the ways in which these policies changes are impacting our productivity and the soundness of our economy.
I have serious concerns about the numerous Fed policies that make life more difficult for hardworking Americans and have an inherent lack of transparency. The Fed would be well served to adopt a more rules-based approach, as opposed to the discretionary approach it employs. Doing so would make the Fed more transparent and help our economy return to a more normalized state. Historically, when the Fed has followed a rules-based approach, these periods have experienced strong economic performance and strong employment.
These regulatory impacts and lack of transparency from the Fed represent real costs and eliminate choices and services for consumers — both families and small businesses — on Main Streets from Chatham to Warrenton. Dodd-Frank and the government-knows-best mentality the Fed employs have stifled our anemic economic recovery and is inflicting extensive damage on our local economies that will likely take years to restore.
This week, the Financial Services Committee continues our series of Dodd-Frank oversight hearings with the goal of developing policies that reinvigorate our economy, make the Federal Reserve more transparent and accountable, and prevent a the possibility of another government-induced bailout so that taxpayers are not on the hook during the next crisis.
Rep. Robert Hurt (R-5th) is Rappahannock County’s member of Congress. More online at hurt.house.gov.