Yesterday the House of Representatives passed legislation to repeal Dodd-Frank on a 233-to-186 vote, with all Democrats voting to retain the failed law. It is important to understand that Dodd-Frank was an ill-conceived disaster. It has driven community banks out of business because they can’t afford the red tape, thereby increasing the market shares of a handful of mega-banks. It has hurt small business, which relies on community banks for financing. And it has accomplished nothing to balance these baleful consequences. We need to drive a stake through its heart.
Investors Business Daily hails the House vote:
Former FBI director James Comey’s testimony before the Senate Intelligence Committee was the fixation of Washington on Thursday. But the big story was on the House side of Congress, which passed a bill to repeal the ruinous Dodd-Frank banking law.
Put simply, Dodd-Frank has been a complete failure. Signed into law by President Obama almost seven years ago in the wake of the financial crisis, this massive law was supposed to, in his words, “be good for the economy … foster innovation … stop taxpayer bailouts once and for all.”
It has lived up to zero of those promises.
Dodd-Frank’s 22,000 pages of regulations, which cost $36 billion to comply with in the first six years, has choked competition in the banking industry, made banking more expensive, harmed economic growth and, to top it off, failed to make the banking system safer or end “too-big-to-fail.”
Since Dodd-Frank became law, for example, more than 1,700 banks have disappeared — more than one a day, on average. The banking industry got more concentrated.
Left in place, Dodd-Frank will cut the nation’s GDP by nearly $900 billion by 2025, according to the American Action Forum.
American Enterprise Institute Fellow Peter Wallison, who was a member of the official financial crisis investigation committee, argues that “without the repeal or substantial reform of Dodd-Frank, the U.S. economy will continue to grow only slowly into the future.”
My think tank, Center of the American Experiment, hosted Peter Wallison at a lunch forum last year. You can read his speech, titled “How Dodd-Frank Damaged Community Banks and Hurt Small Businesses,” here.
Dodd-Frank created an unaccountable regulatory monster in the form of the Consumer Financial Protection Bureau. Within the span of just a few years, the CFPB exploded in size and regulatory might, using its unchecked authority to attack credit bureaus, auto lenders, education loans, payday lenders and prepaid cards. It also started collecting massive amounts of sensitive financial data on millions of Americans.
The Credit Union National Association figures that CFPB regulations cost credit unions more than $7 billion in compliance costs in one year alone.
Late last year, a U.S. appeals court ruled that the design of the CFPB was unconstitutional because it gave the director “more unilateral authority than any other officer in any of the three branches of the U.S. government, other than the president.”
The House’s Financial Choice Act, IBD concludes, “would strip the worst elements of Dodd-Frank and rein in the CFPB. The result will be a healthier financial sector and faster economic growth.”
Sadly, Dodd-Frank repeal won’t happen. Why? Because Senate Democrats who don’t care about economic growth or competition in the banking industry will block it. What will probably emerge, IBD says, is “a Dodd-Frank reform bill that is tepid enough to attract sufficient Democrats to overcome a filibuster.” Which is probably better than nothing, but nowhere near enough.
Which, once again, raises the question: Why should a Senate minority have the power to frustrate the will of the majority of the House, the majority of the Senate, the President, and the many millions of voters who elected them? The filibuster is obviously undemocratic. Does it have a redeeming virtue?
Historically, the conservative argument for the filibuster is that it makes it harder for the federal government to do anything. If we lived in the world imagined by the Founders, and efforts to expand the reach of government by temporary majorities in Congress were being blocked by a 60-vote requirement in the Senate, the theory would make sense.
But that world is long gone. We are now living with generations’ worth of terrible legislation that needs to be reformed or repealed. Moreover, Congressional deadlock doesn’t mean that nothing happens. Rather, the vacuum is filled by the administrative state, which rolls merrily along, asserting non-constitutional powers that only grow. All of which means that conservatives should want a Congress that is able to act, not a Congress that is unable to act–even though we recognize that Congress’s actions will often be unwise.
It is time to do away with the filibuster.