HOUSE APPROVES HOUSE/SENATE AGREEMENT ON H.R. 4173, THE DODD-FRANK WALL STREET REFORM & CONSUMER PROTECTION ACT
 

Washington, Jun 30, 2010 -

– “This measure creates the framework for making the taxpayer bailout of the financial industry permanent while failing to reform Fannie Mae and Freddie Mac, two entities central to creating the financial crisis,” stated Rep. Cliff Stearns (R-Sixth).  “Fannie and Freddie already have cost taxpayers $145 billion, and the nonpartisan Congressional Budget Office (CBO) projects that ultimately they will cost the taxpayers $380 billion.  Also, by increasing Federal Deposit Insurance Corporation (FDIC) assessments, H.R. 4173 would mean that commercial banks could essentially end up funding the bailout of large hedge funds.  In addition, these new regulations will result in less credit, higher costs, and fewer loans, especially endangering small community banks and the customers they serve.”

Stearns today opposed passage of the House and Senate agreement on H.R. 4173, the Dodd-Frank Wall Street Reform & Consumer Protection Act, which at 2,300 pages, is longer than the health care bill. Explained Stearns, “Federal regulators failed to foresee the financial collapse in 2008 and H.R. 4173 merely creates new offices for the same regulators.”   The measure creates the Financial Stability Council to make recommendations to the Federal Reserve for rules on capital, leverage, liquidity, and risk management.

The measure also creates additional federal agencies and offices:  the Financial Stability Oversight Council, an Office of Financial Research, the Office of Minority and Women Inclusion, the Federal Insurance Office, the Office of Investor Advocate and Ombudsman, the Office of Fair Lending and Equal Opportunity, and the Consumer Financial Protection Bureau.

“The Consumer Financial Protection Board would be an independent bureau within the Federal Reserve with wide latitude to write rules for banks and non-banks in order to bypass the legislative process,” continued Stearns.  “Regarding the Federal Reserve, for total transparency we need a comprehensive audit of all of the operations within the Federal Reserve – this bill merely allows a limited one-time audit of the Federal Reserve’s emergency lending programs from the financial crisis.”

As Stearns noted, “This legislation directs the Federal government to designate firms as ‘systemically significant’ and codifies the concept of ‘too big to fail’ with taxpayers covering the costs.  Furthermore, it gives the new clearinghouses that are supposed to handle most derivatives trades access to the Federal Reserve discount window, so that the same exchanges that are designed to reduce the risks of derivatives trading will have the Federal Reserve as a backstop if they experience financial trouble.”

 Citing a Wall Street Journal editorial from June 28, 2010, Stearns quoted, “In the name of responding to a crisis, the bill greatly increases the power of politicians and regulators without addressing the real causes of the crisis.It makes credit more expensive and punishes business without reducing the chance of future panic or bailouts.”

“I opposed the bailout of the financial firms and I oppose this bill that will make taxpayers pay for the bad decisions of financial institutions,” concluded Stearns.  “In addition, with a slow economy and sluggish job growth, imposing burdensome new regulations, taxes, and expenses on the private sector will hamper efforts to reinvigorate the economy.”

Click for a pdf of the groups and organizations that have taken a position on this legislation.