"We remain stuck in the slowest and weakest economic recovery in our history. Last quarter’s pathetic GDP growth of less than 1 percent merely punctuates the point,” Hensarling said in a speech to the Economic Club of New York on Tuesday. “One of the principal reasons is the Dodd-Frank Act, a grave mistake Washington foisted upon the American people nearly six years ago. Simply put, Dodd-Frank has failed.... "When they voted for it, supporters of Dodd-Frank told us it would 'promote financial stability', 'end too big to fail', and 'lift the economy'." Hensarling continued. "None of this has come to pass....Ending and replacing the mistake of Dodd-Frank is the necessary start if we ever hope to restore real economic growth in America. “In a phrase, we need economic growth for all and bank bailouts for none. This is the foundation of the Republican plan I will unveil today," he said.
The new legislation, known as the the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs) Act, will be introduced later this month, Hensarling said. Cracking down on fraud and deception on Wall Street is a key part of the new legislation. “The Financial CHOICE Act will impose the toughest penalties in history for financial fraud, self-dealing and deception,” he noted. Hensarling defended capitalism as "the greatest, most effective economic system to raise prosperity for everyone from the bottom to the top." “Those on the Left who gave us Dodd-Frank believe in the principle that human nature is self-destructive and that people (except themselves, of course) are fundamentally ignorant. Therefore, when it comes to markets they believe private businesses are essentially predatory in nature and people are hapless victims,” he said. “Consequently, their solution to the financial crisis was to impose yet even more stifling government regulations, restrict economic liberty and give Washington the power to direct financial institutions... “Instead of lifting our economy as Dodd-Frank’s supporters claimed it would, it has made us less prosperous,” he noted.
The congressman criticized the policy of bailing out failing corporations under Dodd-Frank, and emphasized that under his new legislation, bankruptcy would replace government bailouts. “Dodd-Frank codified into law Too Big to Fail and taxpayer-funded bailouts,” he said. “This is bad policy and worse economics. It erodes market discipline and risks even further bailouts. It becomes a self-fulfilling prophecy, helping make firms bigger and riskier than they otherwise would be.” “[One] key part of our reform plan is to end Too Big to Fail once and for all. The answer is simple: bankruptcy, not bailouts,” he said. Besides failing to revive the economy, the Dodd-Frank Act is also unconstitutional, Hensarling claimed. “Perhaps more ominously than making us either less prosperous or less stable, Dodd-Frank has also made us less free...It represents a breathtaking, unconstitutional outsourcing of legislative powers to the executive branch,” he warned.
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