Dodd-Frank and Other Financial Services Bills

Floor Speech

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Mr. BARR. Mr. Speaker, today, I rise to discuss the negative consequences of the Dodd-Frank law, as well as reforms to the law that would represent much-needed solutions for middle class families in Kentucky and across the country.

When this act was signed into law nearly 5 years ago, its supporters made many promises. President Obama claimed it would ``lift the economy'' and that it would help protect Main Street, not Wall Street. In both of these instances, the opposite has proven true.

While the President is claiming victory on the economy, many Kentucky families and families across America are still hurting. Last year, the U.S. economy grew at an anemic 2.4 percent, the ninth year in a row of growth below the postwar average of about 3 percent.

President Reagan also inherited a very difficult economic situation; however, if this recovery had progressed at the same rate as the Reagan recovery of the 1980s, the economy would be about $2 trillion larger, which works out to be about $1,500 more per family per year.

This is hardly the boom that the President talks about. Growth this low for this long is simply not fast enough to lift incomes for most Americans.

A primary cause of the weakness of this recovery is the avalanche of red tape coming out of the Obama administration, including the nearly 400 new rules and regulations arising from Dodd-Frank that are crushing small communities around the country.

Dodd-Frank imposes costly and burdensome restrictions on community banks and credit unions that limit their ability to loan money to their customers, which is hindering economic growth and hurting low- and middle-income Americans the hardest.

A community banker in my district told me that before Dodd-Frank, lending decisions were often made based on a business judgment about the character and the creditworthiness of their customers.

People in small towns across America, they know each other, and local banks and credit unions are in the business of helping their neighbors. These institutions assume the consequences of their decisions at no risk to the financial system or to taxpayers who have been on the hook for bailouts.

So they are willing to take a risk, both in terms of how to best help their customers achieve his or her dreams and how to provide a reasonable return for the shareholders of the bank or members of the credit union.

But that same banker told me that, after Dodd-Frank, the government is making the decisions instead of the shareholders or the bank board, imposing a one-size-fits-all, top-down mandate on local financial institutions.

Rather than working with people, this community banker now deals with mountains of paperwork and Federal regulators. The result has been a disaster.

The number of community banks has declined by 9.5 percent. There have been far fewer new community bank charters, and less services and products are now offered to customers and consumers.

The law created new, unaccountable bureaucracies on top of an overly complex financial regulatory system. New, unaccountable bureaucracies like the well-sounding but mislabeled Consumer Financial Protection Bureau and the Financial Stability Oversight Council operate largely out of public view and are subject to almost none of the checks and balances imposed on other government agencies.

For example, the Bureau deemed Bath County, Kentucky, with a population of about 10,000 people, as nonrural, making it even more difficult for its people to secure loans from community banks and credit unions.

Think about this: the ridiculous scenario of Washington, D.C., bureaucrats labeling one of the most rural parts of America as nonrural and hurting the people as a result.

Shockingly, this unaccountable agency provided no valid justification for how they came to this conclusion, nor any means to challenge this arbitrary determination.

After I introduced legislation, along with members of both parties, to address this issue, the agency, after more than a year of delay, finally relented and expanded its definition of rural to include Bath County.

While this is a positive development for this Kentucky county, the process remains opaque, arbitrary, and not subject to appeal, and our rural communities continue to struggle with one-size-fits-all regulatory approaches for which they lack the resources to comply.

This week, I will reintroduce the Helping Expand Lending Practices in Rural Communities Act, which would give individuals an appeals process by which to contest this designation.

Dodd-Frank includes several other rules which are holding our economy back. Thanks to the Bureau's qualified mortgage rule, it is now harder for creditworthy low- and moderate-income Americans to buy a home.

The Volcker rule has made U.S. capital markets less competitive internationally, creating unnecessary obstacles for U.S. companies to raise the funds they need to grow their businesses and create jobs.

Despite the stated intentions of this law, community banks and credit unions have been left to comply with onerous new regulations intended to prevent a repeat of the financial crisis they did not cause.

The SPEAKER pro tempore. The gentleman's time has expired.

Mr. BARR. Mr. Speaker, let's join together, cut red tape and unnecessary regulations that are holding our communities back. We can create real opportunity and encourage private sector growth by repealing this law and starting over.

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