Happy first Birthday Dodd-Frank! What? No smash cake? No balloons? No party horns? Nope. Nada, nothing.
Instead of all the fan fare, Wall Street marks the one year anniversary of this "landmark" and "historic" legislation with a big ole question mark as the litany of new rules and regulations still need to be made.
I caught up with Rep. Patrick McHenry (R-NC) Majority Deputy Whip and Chairman of the Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs on the one year anniversary of the bill as well as the debt debacle.
LL: Today marks the one year anniversary of Dodd-Frank. The wheels for this vehicle are still being built let alone in motion. What are you most concerned about?
Rep. McHenry: The bottom line is that the legislation was the wrong approach to fix the problems that led to the financial crisis in the first place. Instead of addressing Fannie Mae and Freddie Mac’s contributions to lowered borrowing standards and the subsequent housing bubble, the majority at the time decided they didn’t want to let a good crisis go to waste and passed a laundry list of their own legislative and regulatory priorities.
My concern is that Dodd-Frank contributes a great deal to the uncertainty felt by business owners who have no idea what their compliance costs will be. Dodd-Frank has acted as a wet blanket on our economy and could pose a significant threat to American competitiveness.
LL: What are you happy with?
Rep. McHenry: While there are some needed disclosure and transparency provisions included in this new law, as a whole, it is a massive intrusion of federal government into the lives of every American. It will move us further toward a managed economy, with the federal government making decisions that should be made by individuals and private businesses.
LL: Today the Financial Services Committee is voting on the “Consumer Financial Protection Safety and Soundness Improvement Act”. Do you think it will pass in the Senate?
Rep. McHenry:I think that if the President wants to see his nominee for the CFPB get an up or down vote, he should accept these reasonable reforms to make the Bureau more responsible to the American public.
LL: What do you think of President Obama's pick of Cordray?
Rep. McHenry: Well our real concerns have not been with the choice for Director, but instead with the structure of the CFPB itself. However, I do have some concerns about Mr. Cordray’s past statements among other things. Anyone who compares rank and file employees in the financial services industry to Nazi’s on trial at Nuremberg would probably be too extreme and partisan for the position.
LL: Are you in favor of the Gang of Six plan?
Rep. McHenry: Since my first campaign for Congress, I have promised my constituents that I would not support any measures to increase taxes. I think we can find common ground on a solution to increase the debt ceiling that cuts spending without raising taxes.
LL: Financial Service Chairman said on the floor Tuesday, "The imminent threat to the safe haven of Treasury bonds and our national security is default and downgrade." With all the partisan bickering going on its not a matter of who blinks first but which side comes to terms with reality. Will reality smack Congress in the face before a default happens?
Rep. McHenry: Republicans in the House of Representatives understand the gravity of the situation. We are the only side at the negotiating table to actually put forth and pass a plan to avoid default.
LL: 7,000 municipalities which are already enduring financial duress will be downgraded by Moody's if the nation defaults. Facing higher borrowing costs will not help these cities.
Rep. McHenry: Since the beginning of the year, my Oversight and Government Reform subcommittee has held a series of hearings on the possibility of state and municipal defaults, so this has been an issue that I’ve studied closely. The precarious position that states and municipalities find themselves in have been caused by years of overspending and generous pensions and benefits for government workers. The credit rating agencies have also made clear that if a debt ceiling increase is not accompanied with serious reforms to reduce our deficit our credit rating will continue to be in jeopardy.
A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."
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