“YES” on the Financial CHOICE Act (H.R. 10)

This Thursday, the House is scheduled to vote on the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs) Act (H.R. 10), introduced by Chairman Jeb Hensarling (R-TX). The bill would repeal or replace some of the worst provisions established by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

In response to the housing collapse and financial crisis of 2007-08, Congress rushed to pass Dodd-Frank under the guise of “consumer protection.” But instead of addressing the root causes of the financial crisis, such as the government’s reckless efforts to expand housing affordability and implied guarantees to bailout large financial institutions, Dodd-Frank empowers the very regulatory establishment that created the environment that led to the financial crisis in the first place.

Heritage Foundation Research Fellow in Financial Regulations Norbert Michel writes:

“The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act is among the most inappropriately named laws ever enacted in the U.S. It neither reformed Wall Street nor protected consumers, and it imposed massive new regulations on banks far away from Wall Street.”

The CHOICE Act would enact a number of significant financial service reforms including:

  • Mitigate “too big to fail” policies and bank bailouts by repealing most of Title I and all of Title VIII of Dodd-Frank.
  • Stop the government from seizing troubled financial firms through orderly liquidation and return to a time-tested bankruptcy system by repealing Title II of Dodd-Frank.
  • Fundamentally reform the CFPB:
    • Rename it as the “Consumer Law Enforcement Agency”
    • Governed by a single director removable at will by the president along with a deputy director appointed by the president
    • Restructure into an enforcement agency only, with no supervisory authority
    • Subject it to congressional oversight and the appropriations process
  • Rein in the Federal Reserve’s emergency lending authority by making it more difficult for the Fed to conduct bailout-style loans to insolvent firms.
  • Unleash small business creation, innovation and entrepreneurship by eliminating the misguided Volcker rule which has limited capital formation over the past few years.
  • Subject all new major rules imposed by financial regulatory agencies to congressional approval under the Regulations from the Executive in Need of Scrutiny (REINS) Act.
  • Strengthen penalties on Wall Street for those who engage in fraud, insider trading and other corrupt practices.

The original bill also included the repeal of the so-called “Durbin Amendment” that allows the Federal Reserve to price-fix interchange fees from debit card purchases, but unfortunately House Republicans removed this provision due to pressure from big box retailers.    

Along with imposing 3,500-plus pages of new rules and regulations on the financial industry, Dodd-Frank codifies “too big to fail” policy, runs local community banks out of business, restricts access to credit for investors and homebuyers, raises lending costs, and reduces access to capital for small businesses. It also created one of the most powerful and unaccountable federal agencies — the Consumer Financial Protection Bureau (CFPB). Evidence shows Dodd-Frank is one of the major factors responsible for the country’s historically slow economic recovery.

Research conducted by Norbert Michel and Salim Furth, Research Fellow in Macroeconomics at the Heritage Foundation, demonstrate that passing the Financial CHOICE Act would increase U.S. income by an average of one percent of GDP a year from 2017 to 2026 while also increasing federal revenue by $340 billion as businesses choose to increase investment.

Contrary to the charges levied by some Democrats, the Congressional Budget Office (CBO) recently found that community banks, not Wall Street, would reap the most benefits from the CHOICE Act by taking advantage of a provision that frees financial institutions from onerous federal regulation if they maintain a capital election leverage ratio of at least 10 percent. Wall Street is actually opposed to the bill as “CBO expects that most of the financial institutions that chose to maintain a leverage ratio at 10 percent would be those with assets below $10 billion, commonly known as community banks.” In addition to the economic benefits, CBO concluded that the CHOICE Act would save taxpayers billions of dollars by reducing federal deficits by $24.1 billion from 2017-2027.

Summarizing the core principle of the bill, Norbert Michel issued this statement:

“Dodd-Frank enshrined too big to fail with several key changes that make future taxpayer bailouts likely. The Financial CHOICE Act of 2017 repeals those key provisions and reduces the likelihood of future bailouts by providing regulatory relief for firms that absorb their own losses. Specifically, The CHOICE Act provides relief to banks that choose to fund themselves with more equity, thus lowering the probability of failure and taxpayer bailouts. Thus, the Financial CHOICE Act emphasizes the key principle that should drive any financial regulatory reform effort: there’s no justification for heavily regulating companies that bear their own losses.”  

Thanks to the courageous leadership of Financial Services Committee Chairman Jeb Hensarling, dating all the way back to June 2016 when he first introduced legislation, Republicans will finally have the chance to end bank bailouts and follow through on their campaign promise to undo Dodd-Frank — the Obamacare of the financial service sector of the U.S. economy.

***Heritage Action supports H.R. 10 and will include it as a key vote on our legislative scorecard.***        

Related:
Heritage Action: Legislative Endorsement: Hensarling’s Financial Choice Act (H.R. 10)
Heritage Foundation: The Case Against Dodd-Frank (2016)
Heritage Foundation: The Macroeconomic Impact of Dodd-Frank-and of Its Repeal (2017)
Heritage Foundation: Repeal The Durbin Amendment: Restore The Rule Of Law (2017)
Heritage Foundation: Consumer Protection Predates the Consumer Financial Protection Bureau (2017)

Key Vote: “NO” on FY17 Omnibus Spending Bill (H.R. 244)

This week, the House and Senate will consider the Consolidated Appropriations Act of 2017 (H.R. 244), a 1,665-page omnibus spending package that would fund the federal government through September 30, 2017. The Heritage Foundation explains that while the bill, which was released publicly at 2 AM Monday morning, “does make progress” on some issues, “it woefully fails the test of fiscal responsibility and does not advance important conservative policies.”  

Many conservatives went along with a short-term continuing resolution last December based on a promise that the current deadline would be used to advance key policy priorities. Instead, the bill is widely viewed as a rebuke to President Trump’s agenda and conservative priorities.

Overall, the Trump administration requested an additional $30 billion in military, $1.5 billion to continue construction of the southern border wall, and $18 billion in discretionary cuts. The bill provides only $15 billion for defense (of which $2.5 billion is withheld until the administration submits a plan to combat ISIS), provides no funding for the border wall, and actually increases domestic discretionary spending. Through a combination of emergency funding and overseas contingency operations funds, the bill pushes discretionary spending $93 billion above the budget caps.

The Trump administration was rebuked at the program level as well. The Department of Energy’s Office of Science will receive an additional $42 million, whereas the administration requested a $900 million reduction. Funding for Community Development Block Grants was kept level despite a $1.5 billion requested reduction. The list goes on, as CQ Roll Call reported (sub. req’d) earlier this week: “Trump proposed killing off more than a dozen federal programs in his fiscal 2018 budget outline, but it doesn’t appear appropriators are inclined to reduce or eliminate federal funding for any of those line items.”

Liberals celebrated the bill as a victory over President Trump and claimed they successfully blocked “more than 160 Republican poison pill riders.” Heritage notes the omnibus “fails to advance almost any key conservative policies” as “it would continue to provide funding for Planned Parenthood and do nothing to restrict funding to sanctuary cities.”

Along with a lack of conservative policy riders, the bill contains a $1.3 billion bailout for the United Workers of America, a union that represents about 10 percent of all coal production in the U.S. today. Coal miners deserve proper health care and retirement benefits, but it is the job of the union and private companies that made those promises, not taxpayers, to provide those benefits.

H.R. 244 contains a second health care bailout to Puerto Rico. In passing a bill to help Puerto Rico restructure its debts last year, lawmakers promised there would be no cash bailout. Yet, this bill would give the mismanaged and politically corrupt Puerto Rican government $296 million in taxpayer dollars to cover their shortage in Medicaid funds.  

Coupled with these two bailouts, the omnibus spending bill also funds liberal priorities and initiatives. H.R. 244 includes millions in increased funding for Department of Energy (DOE) pet projects, national parks, Amtrak, Head Start, college tuition assistance, the National Endowments for the Arts and Humanities, the Transportation Security Administration (TSA), and even a Bureau of Land Management (BLM) sage grouse conservation project.

When spending bills provide more funding to the National Institutes of Health (NIH) than border security, as this bill does, it’s fair for conservatives to ask if this resembles more of an Obama administration-era spending bill than a Trump one.

The Heritage Foundation’s Justin Bogie and Rachel Greszler acknowledge the bill “does make progress” on some issues, but they add:

“Unfortunately, the additional $15 billion in defense spending is only half of what President Donald Trump requested earlier this year and is inadequate to meet global threats facing the country.

“The additional $1.5 billion for border security is important in the battle to curb illegal immigration. However, none of these funds can be used for construction of a border wall, one of the president’s top priorities.

“Unfortunately, none of the increases in spending proposed by this bill would be offset. Earlier this year, the president released a ‘skinny budget’ which proposed $18 billion in 2017 cuts, yet none of those cuts made it into the latest budget deal.”

Heritage Action opposes H.R. 244 and will include it as a key vote on our legislative scorecard.  

Related:
Heritage: Massive Spending Bill Fails to Meet Conservative Priorities

“NO” on American Health Care Act (H.R. 1628)

UPDATE (4/26/17): Heritage Action will withdraw the current House key vote against the American Health Care Act (H.R. 1628) if the MacArthur-Meadows Amendment, as currently understood and drafted, is adopted.

Key Vote: “YES” on Disapproval of the HHS Rule requiring Title X funds to go to Planned Parenthood

This week the House of Representatives is expected to vote on H.J.Res. 43, sponsored by Rep. Diane Black (R-TN), a disapproval resolution of the final rule submitted by Obama’s Secretary of Health and Human Services (HHS) relating to compliance with Title X requirements by project recipients in selecting sub-recipients. Title X of the Public Health Service Act provides federal funds to states for family planning grants.  Once states receive the funds, they have the ability to prioritize sub-recipients, directing funds to organizations like community health centers and family health clinics. While federal law prohibits government funding for abortion, it does allows certain public dollars, like the Title X grants, to support abortion providers if the funds are directed to non-abortion related health services.  Under this exception, Planned Parenthood has been eligible to receive Title X funds, per the states’ discretion.

However, after the Center for Medical Progress released videos suggesting that Planned Parenthood Federation of America affiliates are harvesting and selling the body parts of aborted unborn children, many states, including Alabama, Arkansas, Arizona, Florida, Louisiana, Kansas, Missouri, Ohio, Oklahoma, and Wisconsin, took steps to ensure that Title X funds were flowing to real health care clinics – – and not the abortion industry.  But, as Melanie Israel at The Heritage Foundation explains in her article Obama’s Last Gift to Planned Parenthood, the Obama Administration’s HHS stepped in to protect Planned Parenthood’s federal funding stream:

“President Barack Obama has given Planned Parenthood a parting gift in the final weeks of his administration….the Department of Health and Human Services proposed a rule that would prohibit states from blocking Planned Parenthood from receiving Title X family planning services grant money for reasons “unrelated” to its ability to provide family planning services….The rule was proposed in response to several states’ attempt to defund Planned Parenthood after the nation’s largest abortion provider was featured in a series of undercover videos released by the Center for Medical Progress last year.”

Despite this parting gift, Israel goes on to explain that the new Congress, and President Trump, have a unique opportunity to overturn this rule by using the Congressional Review Act:

“According to the Congressional Review Act, Congress and a new president can overturn rules issued in the waning days of a previous administration…The Congressional Research Service has estimated that anything submitted to Congress after the end of May 2016 can be undone in this manner, meaning there are many rules and regulations that the incoming Congress could and should vote to rescind….Incoming members should put Planned Parenthood’s parting gift on the list of items to address using the Congressional Review Act when Congress returns in the new year.”

Overturning this rule is the appropriate step for Congress to take, to both protect life and reassert that the states have Tenth Amendment rights to allocate Title X family planning grants in such a manner as to prioritize community health clinics and true family planning over the industrial abortion industry represented by Planned Parenthood.  The HHS rule is a classic example of excessive federal rulemaking and executive overreach for partisan political gain, making it a perfect target for nullification under the CRA.

Heritage Action supports H.J.Res. 43 and will include it as a key vote on our legislative scorecard.

Related:
Obama’s Last Gift to Planned Parenthood
Pro-Life Groups Fight Obama Administration’s ‘Parting Gift’ to Planned Parenthood

 

“YES” on Disapproving the Stream Protection Rule (H.J.Res. 38)

On Wednesday, the House of Representatives will vote on H.J.Res. 38, a resolution disapproving of the rule submitted by the Department of the Interior’s Office of Surface Mining (OSM) known as the Stream Protection Rule (SPR).  Offered by Representatives Bill Johnson (R-OH), Evan Jenkins (R-WV) and David McKinley (R-WV), this resolution would ensure that final SPR has no force or effect, and that OSM cannot issue a rule that is substantially the same without subsequent authorization from Congress.

While initially proposed in 2008, the rule wasn’t finalized until December 19, 2016.  During the intervening time, The Heritage Foundation wrote extensively about the profoundly negative impact this rule would have on the coal mining industry. In his paper The Assault on Coal and American Consumers, Heritage Foundation scholar Nick Loris writes:

“According to the OSM’s own projections, the proposed rule could eliminate 10,749 jobs in Appalachia. The new rule would impose additional permitting and reporting requirements and restrict various mining activities. The rewritten rule also has several serious problems. It only vaguely defines permit requirements, monitoring, and stream classifications, which it applies to both surface and underground mining.It removes flexibility in how companies reclaim mine sites, for instance by requiring reforestation even though wildlife organizations are working with the coal industry to provide grassland habitats for a wide range of species. Furthermore, it ignores regional differences and the efficient state regulatory work that manages those differences.”

Furthermore, Rep. Rob Bishop (R-UT), Chairman of the House Natural Resources Committee, said that:

“This rule is the perfect candidate for congressional repeal. It is an abuse of executive power and the unelected bureaucracy expurgated states from the rule-writing process before jamming it through in the eleventh hour. The sheer economic impact of this rewrite of over 400 regulations is devastating for coal communities and, if allowed to proceed, an utter disaster for existing regulatory processes.”

Under a law known as the Congressional Review Act (CRA), Congress has the power to review regulations issued by Executive Branch agencies, such as the OSM, and even revoke the regulations through a resolution of disapproval. Once the disapproval resolution is passed by both the House and Senate, and signed by the President, the regulation has no more effect and cannot be brought back by any future administration absent specific authorization by Congress.

Additionally, passage of CRAs in the Senate only requires a simple majority vote and is therefore not subject to the filibuster. This makes the CRA a perfect tool for overturning many of former President Obama’s burdensome regulations. As Daren Bakst and James L. Gattuso from The Heritage Foundation have written:

“Both Congress and the President will have an opportunity in 2017 to roll back costly new rules that have been and are continuing to be imposed on the American people by the outgoing Administration. One powerful tool they can use to accomplish this task is the Congressional Review Act. This long-neglected tool can provide Congress with the power to swiftly remove months of Obama Administration rules from the books and to help ensure that they do not come back. Congress should not hesitate to use the CRA extensively.”

Using the CRA to nullify the job-killing Stream Protection Rule is a good first step towards the extensive use that Congressional Republicans should make of this legislative tool — used successfully just one time since its creation in 1996 — to cancel excessive regulations.

Heritage Action supports H.J.Res. 38 and will include it as a key vote on our legislative scorecard.

Related:

WSJ: A GOP Regulatory Game Changer
The Assault on Coal and American Consumers
2017 House Interior and Environment Bill Makes Policy Strides, Still Spends Too Much
Stars Align for the Congressional Review Act