After the 2008 financial crisis, Congress overhauled the nation’s financial regulatory system by creating a regime referred to as the Dodd-Frank Act. This legislation has limited the financial system’s ability to service customers and communities, instead forcing banks to service ever-expanding bureaucracy instead.
Three big failures of Dodd-Frank are corrected in the CHOICE Act.
First, Dodd-Frank’s failing regulations have slowed wage and economic growth across the United States in recent years. The Financial CHOICE Act, which the House Financial Services Committee debated for over 30 hours a few weeks ago, reverses many of these disastrous regulations and empowers lenders to loan again, increasing access to affordable credit for all Americans.
The loan-growth average during the years after every recession in the last 100 years is a cumulative 63 percent, but since the Great Recession, it’s been only 18 percent. The difference between 63 percent and 18 percent loan growth is millions of new jobs, thousands of new businesses and millions of Americans’ access to credit.
Not only does the CHOICE Act enable “Main Street” lenders to service their communities again, but it also ends the potential for future bailouts by American taxpayers. Dodd-Frank’s biggest failure was that it institutionalized “too big to fail” instead of ending it.
By conferring special advantages—telling investors in banks that some are too important for the federal government to let go bankrupt—Dodd-Frank ensured those institutions would have a funding advantage they could use to grow larger still. How much bigger are the balance sheets of the five largest U.S. banks today versus when Dodd-Frank was passed? The market share of the five largest banks in the country are up about 20 percent since the recession while the share of every other segment (small banks, medium banks and large banks excluding the top five) is down.
Third, the CHOICE Act holds Washington accountable as well.
Washington bureaucrats, arrogant enough to believe they know better than you what’s best for your family, have eliminated products, built a confusing patchwork regulatory burden, and failed to demonstrate their rules are helping you. The CHOICE Act creates transparency in regulation and clarity in rules, and ends secretive committees.
Washington, D.C., needs to be held accountable to protect the economic liberties and choices of the American people.
The beating heart of our economy is a strong financial marketplace allowing businesses and individuals to grow, create new jobs and increase wages. We must facilitate capital in the marketplace to ensure that the small business starting in a garage or the bustling, expanding company has access to the resources to help make those American dreams a reality.
At the end of the day, legislation like the Financial CHOICE Act is the reason hard-working Hoosiers sent me to Washington, D.C. I stand fully committed to returning hope and opportunity to American families, lenders and businesses by supporting legislation that puts Americans in control of their financial future, not Washington bureaucrats.•
Rep. Trey Hollingsworth is a Republican representing Indiana’s 9th District in the U.S. House.