House Panel GOP: Scale Back Dodd-Frank, CDBG

WASHINGTON — House Financial Services Committee Republicans are urging the joint supercommittee to significantly scale back the Dodd-Frank Act and its derivatives provisions, as well as reduce the size of the community development block grant program.

In a 12-page letter sent to the deficit reduction panel, the Republicans, led by committee chairman Rep. Spencer Bachus of Alambama, said the Dodd-Frank Wall Street Reform and Consumer Protection Act is “the most significant impediment to economic growth” that falls within the committee’s jurisdiction.

“Signed into law in July 2010, the Dodd-Frank Act ostensibly was intended to respond to the financial crisis of 2008, a crisis brought on in large measure by ill-conceived government housing policies and accommodative monetary policies, which fueled a speculative real estate bubble,” the Republicans said.

While proponents of the new law promised it would increase investment, foster competition and renew confidence in the financial sector, 15 months after its enactment, “many small businesses are starved for customers and credit, unemployment has soared to more than 9%, and for far too many American families economic security seems further away than ever,” the GOP members said.

The act, which has led to more than 400 federal government rulemakings and would require an estimated $27 billion in new fees and assessments, will instead increase the cost of capital and decrease the competitiveness of U.S. markets, the Republicans told panel members.

“This is dead-weight loss to the economy; that is, none of these funds will be used to create jobs,” they said. “One of the areas in which Dodd-Frank’s effect on the U.S. economy threatens to be particularly harmful is in the regulation of derivatives.”

The act has resulted in the proposal of “overly burdensome derivatives rules” that are being rushed through the rulemaking process without adequate comment from market participants, they charged.

In addition, because firms in other nations are not following up with similar rulemaking, “regulations proposed by the Securities and Exchange Commission and the Commodity Futures Trading Commission threaten to place U.S. market participants at a competitive disadvantage,” they claimed.

The group urged the supercommittee to review their pending legislative proposals to scale back the new law.

The Republicans said the CDBG program “has operated as a revenue-sharing program for the states and localities.”

“Although one of the three national program objectives for CDBG is that projects principally benefit low- and moderate-income persons, critics have noted that CDBG funds often end up being used for parks, pools, street signs, and community centers, diverting dollars from those communities with the greatest need.” they said.

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