Our elected officials in Washington have struck again. Just months after passing a tax-raising, job-killing health care bill, Congress is about to approve financial regulatory reform legislation that, ironically, lacks actual reform. Proponents of the Dodd-Frank Wall Street Reform and Consumer Protection Act will undoubtedly hail it as a triumph of Main Street over Wall Street, but they have it backward. It will be small businesses and families shouldering the brunt of this legislation through higher fees, less choice, and fewer opportunities to responsibly access credit.
So what does the Dodd-Frank Act do? For one thing, it calls for more than 350 regulatory rulemakings, 47 studies, 74 reports, and counting. This tsunami of new rules and studies will cause tremendous uncertainty, making it harder for businesses to raise capital, make investments, and create jobs. To put this effort into context, the Sarbanes-Oxley Act required 16 rulemakings and 6 studies--which took more than two years to complete. In the meantime, businesses must contend with a bill of which Sen. Christopher Dodd (D-CT), one of its chief architects, remarked, "No one will know until this is actually in place how it works." If that's not a recipe for confusion, uncertainty, and litigation, I don't know what is!
The complications don't end there. The Chamber believes that you can't have real reform without reforming the regulators. So it comes as a disappointment that the Dodd-Frank Act creates even more regulatory agencies on top of a fundamentally flawed, outdated system, instead of fixing the system itself. These new bodies include the Consumer Financial Protection Bureau, a sprawling new bureaucracy with unchecked and far-reaching powers that could potentially regulate hundreds of thousands of non-financial businesses.
The Dodd-Frank Act will also put American financial firms at a disadvantage by imposing rules and regulations that haven't been or won't be adopted globally. In a world where capital can move easily, it will go to where it is welcome, safe, and can generate a decent return. This new legislation is the equivalent of a "keep out" sign on the front lawn, forcing legitimate business activity to foreign markets that are hungry for additional capital. This will increase the cost of capital here at home, and could further put the squeeze on small businesses.
While the House passage of the Dodd-Frank Act marks a sad day for the U.S. economy, jobs, and the future of our capital markets, the fight is far from over. The Chamber will continue to work vigorously through all available avenues--regulatory, legislative, and legal--to guarantee appropriate implementation of the bill and to ensure that we have the most efficient, transparent, and well-regulated capital markets in the world.