This is a recap of an article regarding the second of three meetings regarding the impact of Dodd-Frank Act on American prosperity, freedom, and financial stability five years after the controversial law was enacted took place in the House Financial Services Committee  . The article was written by Brian Honea and made available DS News which is a mortgage/real estate related website. It follows in its entirety. I would just like to add that what is clear is that we have to stay aware and vigilant if we want to make intelligent financial decisions. We also must be able to assess based on who is looking for accolades and who is trying to spin it.
The hearing, titled “Dodd-Frank Five Years Later: Are We More Prosperous? “, included witnesses Phil Gramm , Senior Partner with U.S. Policy Metrics and former U.S. Senator; R. Bradley Miller , Of Counsel with Grais & Ellsworth and a former member of Congress; and Peter Wallison , Arthur F. Burns Fellow in Financial Policy Studies, American Enterprise Institute. A recurring theme at the hearing was that Dodd-Frank represented overregulation which has stifled economic recovery rather than accelerated it as was intended.
“By any measure we are today experiencing the weakest recovery of a post-war era,” Gramm said. “Had this recovery simply matched the strength of the average of the other ten recoveries since World War II, 14.4 million more Americans would be working today and the average income of every man, woman and child in the country would be $6,042 higher. The incomes of the poor, middle income workers, women and minorities have fallen even during the recovery, an unprecedented event. All this economic carnage has occurred despite a doubling of the Federal debt and an 2 expansion of the Federal Reserve Bank balance sheet and the monetary base at rates never before witnessed.”
Wallison presented a chart that compared recovery from the financial crisis of 2008 with that of previous crises and noted that from 2009 until the passage of Dodd-Frank in July 2010, economic recovery was on the same pace as previous recoveries. He contended that recovery began to slow down when Dodd-Frank was signed into law.
“I believe that all the new regulation added by the Dodd-Frank Act in 2010 is the primary reason for the slow growth this country has experienced since 2010. Later in this testimony, I will show that the new regulations imposed on banks—particularly small banks—has created a bifurcated economy,” Wallison said. “Large firms in the real economy, which can access the capital markets for financing, have been growing roughly in line with previous recoveries, but smaller firms that rely on banks for financing are growing far more slowly. Since most of the growth in the US economy, and especially in employment, comes from small firms, the economy is underperforming and will continue to underperform until the treatment of banks under DoddFrank Act is substantially modified or repealed.”
Gramm, a Republican former Senator from Texas, also said he believes that Dodd-Frank gave regulators too much power.
“Much of our slow growth is not just a product of mounting regulatory burden but of legislative and executive actions that have empowered regulators to set rules rather than implement rules set by Congress,” he said. “Dodd-Frank has undermined a vital condition required to put money and America back to work—legal and regulatory certainty.”
In his opening statement  at Tuesday’s hearing, Committee Chairman Jeb Hensarling (R-Texas) asserted that the massive 2,300-page law “launched a salvo of consequences that have crippled growth,” and that Dodd-Frank had hit Main Street when it was intended to reform Wall Street. As Gramm pointed out, the effects of the “failed recovery” were manifested in the banking system; the FDIC said that 1,341 banks have failed since 2010 while only two new banks have been chartered in the last five years – compared to about 2,500 banks chartered in the quarter century prior to the financial crisis.
“It has had pernicious effects on small businesses and community financial institutions which are the lifeblood of the Main Street economy. Community banks and credit unions supply the bulk of small business and agricultural loans, but the combined weight of Dodd-Frank’s 400 regulations is dragging them down,” Hensarling said. “We are losing on average one community financial institution a day.”
Miller, the Democratic former North Carolina Congressman, admitted there was more work to be done was far as creating an economy that allows Americans to grow and prosper. But he stood in defense of Dodd-Frank at Tuesday’s hearing.
“Dodd-Frank was a compromise and reformers did not get all we wanted, but it was probably all that was possible at the time, given the industry’s continued enormous clout in Washington, even while the industry stood in complete disrepute among the American people,” Miller said. “We are better off, and more prosperous, than we would be without it.”
The first hearing in the series, “Dodd-Frank Five Years Later: Are We More Stable?” took place in the Committee on July 9. The date of the third hearing in the series, titled “Dodd-Frank Five Years Later: Are We More Free?” will be announced later, according to the Committee.
Article printed from DSNews: http://dsnews.com
URL to article: http://dsnews.com/news/07-28-2015/house-committee-examines-dodd-franks-impact-on-american-prosperity
URLs in this post:
 House Financial Services Committee: http://financialservices.house.gov/
 Dodd-Frank Five Years Later: Are We More Prosperous?: http://financialservices.house.gov/calendar/eventsingle.aspx?EventID=399397
 Phil Gramm: http://financialservices.house.gov/UploadedFiles/HHRG-114-BA00-WState-PGramm-20150728.pdf
 R. Bradley Miller: http://financialservices.house.gov/uploadedfiles/hhrg-114-ba00-wstate-bmiller-20150728.pdf
 Peter Wallison: http://financialservices.house.gov/uploadedfiles/hhrg-114-ba00-wstate-pwallison-20150728.pdf
 opening statement: https://www.youtube.com/watch?v=iz_a58pbJlM