Financial Services
Committee Continues Focus On Dodd-Frank’s Impact On Economy, Jobs
May 17, 2012
The Financial Services Committee continues its in-depth look at the
2,300-page Dodd-Frank Act with a subcommittee hearing on examining the
designation of non-bank financial institutions as “systemically
important” – a euphemism for these institutions being deemed by
government as “Too Big to Fail.”
The Financial Stability Oversight Council (FSOC) – an interagency body
of regulators created by Dodd-Frank – issued a final rule and
interpretive guidance describing how it will designate non-bank
financial institutions as “systemically important” on April 3. During
Wednesday’s hearing, members of the Financial Institutions and Consumer
Credit Subcommittee discussed what it means for a company to be
designated “systemically important,” whether the designation provides
firms with an advantage over their competitors, and how FSOC arrived at
its final rule.
“Dodd-Frank did not end ‘Too Big to Fail,’ as its supporters claim; it
enshrined ‘Too Big to Fail’ into law. When government declares a
financial institution is ‘systemically important,’ it is saying that
institution is ‘Too Big to Fail’ because of the perception the
government will step in with a bailout to protect it from collapse,”
said Chairman Spencer Bachus. “Bailouts must end – period.”
Subcommittee Chairman Shelley Moore Capito said the hearing allowed
members to examine the rule’s impact on the economy. “There’s no
question that we need to have the necessary safeguards in place to avoid
another financial collapse, however we must ensure that new rules do not
greatly inhibit economic growth,” said Chairman Capito. “We’ll also hear
from witnesses representing entities that may be designated systemically
important under the new rule in order to learn how the Federal Reserve’s
proposed rule on supervision may impact their operations.”
Witnesses
testifing at the hearing are:
Lance Auer, Deputy Assistant Secretary for Financial Institutions ,U.S.
Department of the Treasury
Michael Gibson, Director, Division of Banking Supervision and
Regulation, Board of Governors of the Federal Reserve System
Scott Harrington, Alan B. Miller Professor, Wharton School, University
of Pennsylvania
Thomas Quaadman, Vice President, Center for Capital Markets
Competitiveness, U.S. Chamber of Commerce
