Feb 17 2011

Shelby: The Dodd-Frank Party is Over

U.S. Senator Richard Shelby, ranking Republican on the Senate Committee on Banking, Housing and Urban Affairs, today made the following statement at a Committee hearing to examine the implementation of the Dodd-Frank financial regulation law.

Excerpts of Shelby’s statement are immediately below in bold, followed by the full text of his prepared remarks:

“The Dodd-Frank party is over.  Unfortunately, our economy is now preparing to pay the tab. 

“Our financial regulators have begun to implement Dodd-Frank and the decisions they make over the next few months will impact every American.  Regulators will determine if Americans can buy a home or a car, and if they can get loans to start businesses.  They will also determine what financial products are available and to whom they may be sold. 

“In Dodd-Frank the majority party delegated an unprecedented amount of authority and discretion to the bureaucracies.  Accordingly, our financial regulators now have more than 200 rulemakings to complete, many by July.

“The work required to implement these rules is staggering.  For lobbyists, lawyers, and government bureaucrats, Dodd-Frank is proving to be a goldmine.  For the rest of us, however, it means more red-tape, more government, fewer choices and higher fees.” 

 

OPENING STATEMENT OF SENATOR RICHARD C. SHELBY

Hearing on the Implementation of Dodd-Frank

February 17, 2011

“Thank you, Mr. Chairman. 

“Last year, Congress passed the Dodd-Frank financial reform act.  The President and the majority party proclaimed the Act a historic legislative accomplishment.  At the signing ceremony, the President declared that the Act would provide certainty to our markets and lift our economy to a more prosperous future. 

“Eight months later, the sober realities of what Dodd-Frank will mean for our economy are now setting in.  Our unemployment rate still stands at record levels.  While the political forces that drove the passage of Dodd-Frank have waned, the huge costs of the Act are becoming very clear. 

“The Dodd-Frank party is over.  Unfortunately, our economy is now preparing to pay the tab. 

“Our financial regulators have begun to implement Dodd-Frank and the decisions they make over the next few months will impact every American.  Regulators will determine if Americans can buy a home or a car, and if they can get loans to start businesses.  They will also determine what financial products are available and to whom they may be sold. 

“In Dodd-Frank the majority party delegated an unprecedented amount of authority and discretion to the bureaucracies.  Accordingly, our financial regulators now have more than 200 rulemakings to complete, many by July.

“The work required to implement these rules is staggering.  For lobbyists, lawyers, and government bureaucrats, Dodd-Frank is proving to be a goldmine.  For the rest of us, however, it means more red-tape, more government, fewer choices and higher fees. 

“Today, I hope to learn more about how our regulators plan to manage this unprecedented workload.   Already concerns have been raised about the quality and fairness of the rulemaking process. 

“In the rush to comply with the unrealistic deadlines set in Dodd-Frank, the regulators have had to focus on speed rather than deliberation.  While our regulators will do their best to comply with the deadlines, Congress should seriously examine whether the speed of the process is undermining its integrity.  There are early indications that it is.

“One of the hallmarks of our regulatory process is its openness.  Yet, with so many rulemakings being considered simultaneously, public participation could be stifled.  It may be practically impossible for parties to provide thorough comments on so many rules and for regulators to fully consider every comment in such a short time frame.

“Although the regulators will receive an enormous quantity of comments, what really matters is the quality of the interaction between the commentators and the regulators.  With that in mind, we should begin considering whether the final rules would be better if our regulators had more time to hear from the public.

“Another consequence of the hasty rulemaking process is that our regulators may not be properly conducting economic analysis of proposed rules.  Any thorough consideration of a proposed rule obviously should include an understanding of its costs. 

“Unfortunately, there are serious questions regarding the willingness and ability of our regulators to conduct such analysis.  At the SEC, the position of Chief Economist has been vacant for 10 months.  At the CFTC, the position of Chief Economist was vacant for 11 months before finally being filled last December.  The failure to promptly fill these key positions suggests that economic analysis is not a high priority for our regulators.

“In light of the fact that the costs imposed by these rules may cause some Americans to lose their jobs, our regulatory agencies should at the very least make themselves aware of the economic impacts of proposed rules before adopting them.

“While improvements in the rulemaking process can smooth the implementation of Dodd-Frank, I am under no illusions that it can dramatically alter its long-term consequences.  Absent legislative action, Dodd-Frank is going to be very expensive. 

“Dodd-Frank may not raise taxes directly, but consumers will soon feel its cost when they pay higher regulatory fees, higher compliance costs, and higher prices for financial services.  Just this week the President’s budget calls for the CFTC to impose $117 million dollars in new taxes in the form of user fees to pay for the costs of Dodd-Frank.

“Over the upcoming months, the hidden costs of Dodd-Frank will only grow as our regulators steadily impose new rules and regulations.  I hope that the Committee will focus at least as much attention on the costs as it does the rules over the next few months.

“Thank you, Mr. Chairman.”