More Federal Bureaucracy?
Last evening I conducted a telephone town hall in East Tennessee, and I heard your frustration over the lack of jobs and high unemployment rate. The American economy continues to lose jobs, and this is very frustrating to me as well. What’s even more frustrating is the lack of accountability and the run-away spending we are seeing by the Democratic Leadership. Furthermore, I oppose the Democrats’ policies that I believe will kill jobs and raise taxes at a time when we are trying to get people back to work.
Tomorrow the House will consider Massachusetts Democrat Barney Frank’s attempt to overhaul our financial system. We all know that there were abuses by big banks on Wall Street that contributed to our recent economic problems, but rather than trying to implement corporate rules that work, this bill centralizes authority in a single individual and adds a new, complicated layer of bureaucracy that will raise the cost of doing business. The 1300-page bill establishes a new Consumer Financial Protection Agency (CFPA) to review and approve consumer financial products and ration consumer credit. This agency will be led by a “Credit Czar” who will have unprecedented (and virtually unchecked) authority to restrict product choices for consumers, and impose fees and other assessments on providers of financial products and services and financial transactions.
A new czar is a bad decision, but what’s even worse is that now Congressman Frank is promising to seek the appointment of liberal Harvard Professor Elizabeth Warren to this position, one that will instantly become one of the most powerful in all of government.
The CFPA would result in tighter credit, higher costs and fees and fewer options. The CFPA would also hold great power to regulate without any responsibility for safety and soundness of the banks. What we should do is improve disclosure, and crack down on criminal actions by lenders and quit rewarding dangerous behavior with taxpayer dollars. Quite frankly, this is a new layer of bureaucracy in a government that is overloaded with bureaucracy.
Furthermore, this legislation also imposes a massive tax during a credit crisis and weak economy. This bills pays for the government’s “bailout authority” by assessing a $150 billion tax on financial firms, which will be passed on to consumers and investors in the form of higher interest rates and increased fees. If sufficient funds cannot be extracted from the industry to pay for the failures of firms the government deems “systemically significant,” taxpayers will be on the hook. The assessments will drain capital from the financial system that could be used for lending or investment that would create jobs and fuel economic growth.
H.R. 4173 also expands the power of the Federal Reserve. This legislation will increase the risk of catastrophic failure of financial firms by concentrating responsibility for overseeing “systemically risky” firms in the Federal Reserve, whose inability to identify and address past risk helped cause the financial crisis in the first place. These provisions represent the most breathtaking expansion of Fed power since the central bank’s creation almost a century ago. The extraordinary market interventions conducted by the Federal Reserve since the onset of the financial crisis have added trillions of dollars to the government’s balance sheet and taken it far afield from its core mission of conducting the nation’s monetary policy.
This legislation is bad for the state of our economy. If the President wants to improve his approval rating, he should try to stop irresponsible spending and bad legislation that is being pushed through Congress. The American people don’t want more government intrusion in their life. They want a healthy economy and a better future for their family.