By Brandon Moseley
Alabama Political Reporter
U.S. Senator Richard Shelby (R) from Alabama issued a written statement after remarks he made on Thursday at a hearing on the Financial Stability Oversight Council’s Annual Report to Congress. Sen. Shelby is the ranking Republican on the Committee on Banking, Housing and Urban Affairs.
Sen. Shelby said, ““In this year’s report, the Council describes a stagnating U.S. economy, with a mere 1.9 percent growth rate in the first quarter and a Federal deficit exceeding 7 percent of GDP. It also reports that U.S. households have seen only modest income growth, that access to mortgage credit is constrained, and that investment is restrained by “continued subdued confidence and elevated uncertainty.”
Sen. Shelby continued, ““As the Council reports, the unemployment rate is still above 8 percent, while labor force participation has fallen to its lowest rate in 30 years. Nearly 4 years into this Administration, not even a Council headed by its own Treasury Secretary can hide the President’s failure to revive the economy and put Americans back to work.”
Senator Shelby said, “If the Council wanted to understand why unemployment is high and mortgage lending is constrained, an examination of Dodd-Frank would have been a good place to start. More fundamentally, the Council’s report overlooks the serious structural flaws in our regulatory system, which Dodd-Frank only made worse.”
Sen. Shelby explained, “Dodd-Frank preserved and codified this preferential treatment for large financial institutions. It solidified the close relationships between regulators and big banks by maintaining their pre-existing prudential regulators. In contrast, the regulator for the smallest banks, the OTS, was abolished. It also protected the big banks from bankruptcy by creating a new resolution mechanism to ensure that large institutions do not fail.”
Sen. Shelby said, ““I have said many times throughout the years that nothing focuses the mind like the specter of being fired. Not one regulator, however, was held accountable in the wake of the crisis. To add insult to injury, the very same regulators that missed the warning signs were then closely consulted on how to draft Dodd-Frank. In fact, staff from the very same agencies that failed us were detailed to Congress to help write the bill. This is the type of thing that outrages the American people, but is sadly business as usual in Washington.”
Sen. Shelby also took a swipe at Treasury Secretary Tim Geithner, “Secretary Geithner is no stranger to bank bailouts or bank regulation.”
The controversial Dodd-Frank Act creates thousands pages of new federal regulations and gives the federal government unprecedented new powers over the economy. As these new regulations begin to go into effect the economic recovery appears to have slowed. The latest economic numbers showed that the economy grew at just 1.5% during the second quarter and unemployment remains at 8.2%. Republicans have vowed to repeal both Dodd-Frank and the Patient Protection and Affordable Care Act if the voters will give them control of the Senate and the presidency.