GOP scrambles to regain fiscal credibility with House budget
GOP chairman: Banks are facing 'regulatory waterboarding'
A top House Republican on Tuesday accused the Obama administration of engaging in "regulatory waterboarding" when it comes to monitoring banks.
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) vowed that he would soon unveil a proposal to replace the Dodd-Frank financial reform law. He portrayed the 2010 regulatory overhaul as a boondoggle that has put smaller bankers out of business.
"Washington's regulatory waterboarding is drowning community banks and small businesses," he told bankers gathered in Washington. "On behalf of every hardworking, struggling American - I will not rest until Dodd-Frank is ripped out by its roots and tossed on the trash heap of history."
Speaking before members of the American Bankers Association, Hensarling said the long-awaited GOP alternative to Dodd-Frank would be simpler but no less effective.
Calling Dodd-Frank a "modern day Tower of Babel," Hensarling argued the complex new rules mandated by the law are making it impossible for small banks to meet all their legal requirements.
"You'll see us offer a bold alternative to the sclerotic status quo of our financial markets," he said. "I can report to you today that we are deep into our planning, and you will soon see our bill."
Tapping into the populist anger that is a force on both the right and the left, Hensarling vowed that his bill would be even tougher on Wall Street's bad actors than the current law. But it would also subject regulators to stricter oversight in their efforts to craft new financial rules, requiring them to go through rigorous analysis of every new initiative.
Hensarling's plan would also allow banks to obtain "vast regulatory relief" if they are willing to hold higher amounts of capital to guard against risks.
"If a bank chooses to have a fortress balance sheet that protects taxpayers and minimizes systemic risk, then bankers ought to be allowed to be bankers," he said.
And Hensarling vowed that the Federal Reserve's operations would be overhauled as part of any regulatory push from him. Long a critic of the central bank's policies, the Texan has repeatedly pushed bills that would limit the institution's powers and subject it to extra outside oversight.
And the conservative lawmaker heaped plenty of scorn on one of Dodd-Frank's biggest pieces: the Consumer Financial Protection Bureau. He reiterated longstanding GOP gripes with the regulator, calling it far too powerful and severely lacking in outside checks on its abilities.
"The Bureau operates with such secrecy, unaccountability and bureaucratic tyranny it would make a Soviet commissar blush," Hensarling said.
Despite Hensarling's vow to act, any GOP effort to revisit Dodd-Frank will face Democratic opposition. Rep. Maxine Waters (D-Calif.), the top Democrat on Hensarling's panel, dismissed his plan later Tuesday.
"This is just another attempt by the majority to gut administration policies that have helped millions of Americans," she said in a statement. "Any plan that repeals the heart of Dodd Frank is a futile exercise that could jumpstart another financial crisis."