The early months of the new Congress have brought a wave of regulatory reforms – none more important than the financial reform bill the House passed last Thursday.
The Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs) Act is the conservative and market-based alternative to the overreaching Dodd-Frank law Democrats rushed through in 2010.
Among Dodd-Frank’s many failings, most critical to me is the burden it places on local banks and credit unions. The result has been fewer loans to Idaho families and small businesses and weakened job creation. That we’ve had the slowest recovery since World War II is in significant part because of Dodd-Frank.
According to the Idaho Department of Finance, Dodd-Frank created a regulatory environment “hostile to community banks” by requiring small institutions to “comply with and pay costs associated with regulation written for big banks.”
This regulatory pressure, says the Idaho agency, has made it “almost impossible” for community banks to make consumer loans, a credit squeeze that “is driving consumers to predatory lenders.”
Dodd-Frank dealt a serious blow to Idaho. In just four years, the number of Idaho-based community banks has dropped by one-third, from 16 to 11. That harms businesses and families eager to invest in a better future.
The CHOICE Act provides for right-sized regulation, restoring the role of community banks and credit unions that have long supplied financing to Main Street. Bankers willing to take a chance on folks they know shouldn’t be hamstrung by regulations intended for huge institutions.
Among the bill’s provisions is an “off-ramp” for well-capitalized banks and credit unions that provide regulatory relief for those self-insuring against risk. According to the Congressional Budget Office, this will benefit community institutions more than big banks. That helps explain why the Idaho Bankers Association supports the CHOICE Act, while Wall Street CEOs are opposed.
The CBO also says the bill will reduce federal deficits by $24 billion over the next decade, a goal we must always keep on the front burner.
The CHOICE Act eliminates the “too big to fail” bailout provisions of Dodd-Frank that put taxpayers at risk. It imposes the toughest penalties in history for fraud and deception, including a tripling of monetary fines. And it demands greater accountability from the Federal Reserve.
The bill also incorporates dozens of House-passed measures from the last four years that unleash opportunities for entrepreneurs and provide regulatory relief for Main Street and community lenders. In short, the bill replaces an overly complex and burdensome system with a simple, fair and transparent structure to spark growth.
The Idahoans I meet every day tell me they just want an opportunity to succeed, to apply their ideas and work ethic to build our economy. They have grown deeply frustrated with a federal government fighting innovation. I promised Idaho that I would help unleash the power of the free market. My vote for the CHOICE Act is a promise kept.