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EDITORIAL: Reforming the reform
A rollback of Dodd-Frank is overdue, and very difficult
Republicans haven’t succeeded in repealing Obamacare, or even restraining the scheme the Democrats pushed through Congress without a single Republican vote. That’s what can happen with a determined Democrat in the White House and the Democrats in control of half of Congress. Republicans in the House will now take aim at another of President Obama’s hyperpartisan achievements, the Dodd-Frank Wall Street regulation bill.
The Republican plan takes aim at the most outrageous and indefensible policies concealed within the 850 pages of the legislation, which was written in the dark. With 14,000 pages of implementing regulations, the law has created a nightmare for businesses that have to make plans based on what it all means. The result has been a universal feeling of uncertainty about the future, according to the Business Roundtable’s regular surveys of chief executives. Uncertain executives are cautious, holding back on hiring and investment, which has kept the economy stalled.
Instead of holding big banks accountable for the financial meltdown, Dodd-Frank is an excuse to expand government and strengthen Washington’s grip on the private sector. The newly created Consumer Financial Protection Bureau, for example, gives jobs to a thousand cronies and wastes half-a-billion dollars duplicating the efforts of the Federal Trade Commission, the Federal Reserve and the Federal Deposit Insurance Corporation.
The House on Wednesday voted 292 to 122 in passing a bill that pares back Dodd-Frank by allowing financial institutions to resume using “swaps,” often used as a hedge against the prospect of a drastic change in interest rates that could create a loss. Swaps are voluntary transactions, but because they’re complicated, it’s easy for politicians to demagogue them.
Earlier this year, the House voted 321 to 62 to repeal a new administration rule imposing “term limits” for outside auditors of a company’s financial statements. The rule isn’t part of Dodd-Frank, but it shares the theme of empowering bureaucrats to damage the private sector.
Other measures have cleared the House Financial Services Committee and await a floor vote. Rep. Bill Huizenga of Michigan is going after Dodd-Frank’s mandate that companies compute the average employee’s salary for comparison to what the CEO makes. It’s the sort of gimmick dreamed up by someone with no idea of the effort involved to create a statistic that is only useful to class-warfare warriors attacking capitalism.
Rep. Robert Hurt of Virginia wants to exempt private equity and growth capital funds from Dodd-Frank’s registration requirements. These funds had nothing to do with the financial crisis, so imposing a layer of red tape on them increases costs without providing any benefit in market stability.
Despite the broad, cross-party support for most of these pending proposals, it’s not clear whether they’ll be able to get past Harry Reid and the Senate. If the attempt to put a leash on the Dodd-Frank legislation comes to naught, like the attempt to repeal or restrain Obamacare, the Republicans will get a clear signal that winning the elections next year and in 2016 is the only way to win a numbers game.
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