And that’s just the start. The House Financial Services Committee will roll out a report today showing that less than half of the required rule-making for the Dodd-Frank bill passed two years ago has been completed, but just the first 46% already comprises more than 5300 pages of rules:
Texas Republican Rep. Randy Neugebauer, the chairman of the committee’s subcommittee on oversight and investigations, told The Daily Caller that means that instead of hiring people to handle small business loans, banks will be hiring staff to comply with the new government regulations, ultimately having a negative impact on job creation.
“For example, let’s just get it down to the community banker — the person that loans money to most of the small businesses in our country,” Neugebauer said in a phone interview. “We’ve had a few community bankers come in here and say, ‘you know, they’re hiring a lot more compliance officer than they are loan officers.’ That is increasing the cost of banking and, ultimately, they have to charge higher interest rates and higher fees.”
“The other thing that it impacts for our small businesses is because of some of the new rules and regulations, there’s a great deal of uncertainty about certain types of financial activity that some of these entities can engage in,” Neugebauer added. “I think that as these rules come out, what we’re trying to ascertain, and our committee has had a number of hearings on, is what the unintended consequences of some of these rules and regulations, but more importantly, just the sheer volume of them.”
The committee has rolled out a “burden tracker” to explain the costs of Dodd-Frank compliance, and will have a video out later today with more information. Rep. Randy Neugebauer put the burden into perspective:
“This online resource will help the public better understand how the cumulative weight of these new rules – layered upon existing outdated, unnecessary and duplicative red tape – hurts small businesses and financial institutions. They have to spend increasing amounts of time and money dealing with all this red tape instead of engaging in the activities that grow our economy and create jobs,” said Committee Chairman Spencer Bachus.
Oversight and Investigations Subcommittee Chairman Randy Neugebauer noted that it will take businesses more time to comply with Dodd-Frank rules than it took to build the Panama Canal.
“It will take over 24 million man hours to comply with Dodd-Frank rules per year. It took only 20 million to build the Panama Canal,” said Rep. Neugebauer. “Banks and credit unions, retirement funds and other financial institutions will be forced to spend a large portion of their budgets trying to comply with Dodd-Frank rules rather than lending to small businesses and American consumers and investing in our economy. While the promised benefits of Dodd-Frank are still illusory, the costs are beginning to become crystal clear.”
The financial markets require regulatory oversight in order to prevent fraud and theft, but that regulatory burden needs to be just heavy enough to get the job done without itself becoming an insurmountable obstacle. Furthermore, the investor class at which this is aimed has to have a stable regulatory environment in order to price risk for future investment. We are almost two years after the passage of Dodd-Frank, and the regulation hasn’t even been halfway completed. Under those circumstances, it’s no big surprise that investors are reluctant to put capital to work in the US economy, and that growth has been stunted as a result.
One might think that an administration with so much on the line in this economy would have put a higher premium on developing such regulations — and overall fiscal and economic policies, for that matter. In my column for The Week, I write about how the Buffett Rule fight shows the intellectual bankruptcy of this White House, and how they are desperate to change the subject:
In this case, though, the failure of the Buffett Rule bill puts the Obama administration in a tough spot, especially after the stunt vote on Obama’s budget. The problem? Team Obama has nothing else to offer on the budget or the economy. In fact, President Obama has spoken of nearly nothing else but the Buffett Rule for the last eight months, since the launch in September of his “fairness” campaign. The White House has sold this proposal as a panacea for nearly all of the nation’s financial ills. The White House spins this surtax as a debt and deficit stabilizer “for the next decade” (September), as well as a strategy for economic growth (in his most recent Saturday address), and finally both, as David Axelrod argued on Fox News Sunday.
Wow! The Buffett Rule must provide an amazing amount of revenue — or so one would think listening to this hype. But it would actually raise just $31 billion to $47 billion … over ten years. Compare that to Obama’s own proposal for the FY2013 budget, which had a projected deficit of more than $900 billion, and ask how $47 billion “stabilizes” the annual deficit, let alone the national debt. As for economic growth, Obama’s 2009 Cash for Clunkers spent more than $3 billion in three weeks and didn’t do anything more than move demand from a future month forward. The American economy will generate more than $14 trillion in this year; even the higher-end number of $4.7 billion would amount to a tiny sliver of the economy, hardly enough to create a hiccup in growth — even if one believes that taking capital away from investors and putting it into the hands of government amounts to a growth strategy. …
The U.S. faces significant economic and fiscal problems, joblessness among them. We do need to stabilize our national debt, which has grown by more than $4.4 trillion in the three years since Obama signed the FY2009 omnibus budget bill two months after taking office ($11.066 trillion to $15.539 trillion at the end of last March), after the Democratic-controlled Congress refused to pass a budget for Bush to sign the previous September, as required. We need tax reform to simplify and broaden the tax base and get more revenue through growth, and we need rapid job creation to fuel that revenue increase.
Instead, though, the Obama administration has spent eight months and uncounted hours of presidential stump time demanding a tax tweak that would solve only 0.45 percent of the annual deficit crisis, provide no growth opportunity at all, and do nothing to create jobs. The Treasury Secretary can only point to three-year-old crisis management as a defense of the administration’s economic policies. No one in the White House has a plan to solve the larger problems, and as this weekend shows, they don’t even want to talk about the larger problems anymore. All they want to discuss is how unfair life is, reminisce about the good ol’ days of 2009, and point out to anyone listening that Mitt Romney is really, really rich.
Ironically, Dodd-Frank is still one of their few talking points on the economy. Don’t expect that to last long.