Hensarling: Dodd-Frank amounts to ‘regulatory waterboarding’

by Ryan Smith18 Mar 2016
The House Financial Services Committee intends to put forward a “pro-growth, pro-consumer” alternative to the Dodd-Frank Act – which, according to the committee chairman, amounts to “regulatory waterboarding.”

During a committee meeting this week, Chairman Jeb Hensarling (R-Texas) blasted the Dodd-Frank Act and said the committee was working on an alternative that would be friendlier to businesses and consumer.

“Dodd-Frank should be called the Obama Financial Control Law, because that’s what it is,” Hensarling said. “It stands as a monument to the arrogance and hubris of man in that its answer to incomprehensible complexity and government control is yet more incomprehensible complexity and government control.”

Hensarling even compared the law’s effect on business to torture.

“Washington’s regulatory waterboarding is drowning community banks and small businesses and sinking the hopes and dreams of millions of low- and middle-income Americans,” he said. “I need not tell you we are losing, on average, one community financial institution every day in America. And they are not perishing of natural causes. The sheer weight, cost, complexity and uncertainty of federal regulation is killing them off – and for the sake of hard-working Americans, it’s just got to stop.”

The Finance Committee’s alternative, Hensarling said, would enact tougher penalties for defrauding consumers and end bailouts.

“Our approach will demand accountability from both financial institutions and financial regulators. We will toughen penalties for those who engage in wrongdoing and defrauding consumers,” he said. “…Our approach will help build the healthy and secure financial system Americans deserve. One that protects consumers by letting you serve their needs in competitive, transparent and innovative markets, vigorously policed for force and fraud. One that ends taxpayer-funded bailouts and instead unleashes America’s entrepreneurial potential.”

The current regulatory system, Hensarling said, is an “unaccountable, arrogant bureaucracy that is dragging us towards the failed economy of a European-style social democracy.”

The Republican alternative, Hensarling said, would provide “vast regulatory relief” to financial institutions that met “high, but simple capital requirements.”

“As we move forward, it’s important to remember that this is not going to be a debate between regulation and de-regulation,” he said. “No, this is going to be a debate over the future of our economy and the hopes and dreams of millions.”

What do you think? Does Dodd-Frank need to be left alone, overhauled, or just scrapped and replaced? Let us know your thoughts in the comments below!


  • by Geoff | 3/18/2016 12:15:19 PM

    Would love to see it go, but a government replacement does not sound too promising based on past experience.

    If we do get new rules then the pain of adoption, change and compliance begins anew. But I suppose it is worth it, the customer is getting screwed on this deal with the compliance fees.

  • by Sue Cutchall | 3/18/2016 12:18:48 PM

    I agree with the article. I work for a community bank. The cost for us to do business since Dodd-Frank has escalated tremendously. We strive to do everything to serve our customer base. We have branches in a lot of small rural communities. We are one of the few that still service our mortgages and sell directly to the secondary market.
    It is almost overwhelming to try to understand and stay in compliance with all of the regulatory changes. We have had to hire additional compliance staff and our third party QC costs have tripled from previous years.
    I understand the importance of changes that needed to be made. I understand the need for regulations, however I believe the current regulations are too cumbersome. The current regulations penalize lenders that are trying to do it right and have been. There are still gaps and loopholes for the lenders that prey on consumers and the regulations do not stop them. They are still out there and continuing to open new shops everyday.
    I definitely believe changes need to be made to the current Act and the regulatory burden eased.

  • by John Lasko | 3/18/2016 12:54:52 PM

    The process for preparing a CD closing disclosure varies by institution. I've been closed mortgages with lenders where the process that is transparent and barely adds additional preparation time.

    Most lenders have various departments cannot reach an agreement on what needs to be included, when and how, subjecting the borrower to unnecessary delays and costs. I have been penalized as a broker for their misunderstanding of the process.

    The latter is more the norm with this new process. Getting a home mortgage is a big step for most borrowers and with TRID it turns into a nightmare of delays and emotional outbursts. Some borrowers are so frustrated ready to walk away from first time purchases.

    The increased frustration and anxiety is driven by regulations designed to protect them. There needs to be a better way!


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