House Committee Finds That Americans Are Less Free as a Result of Dodd-Frank

On the 228th birthday of the U.S. Constitution on September 17, the House Financial Services Committee posed the question as to whether or not the Dodd-Frank Wall Street Reform Act of 2010 has provided the country with more or less freedom.

The hearing, titled "The Dodd-Frank Act Five Years Later: Are We More Free?" was the third in a series of hearings examining the impact of the controversial legislation on the prosperity, freedom, and financial stability of American consumers. The consensus of the Committee during the hearing was that Dodd-Frank has made Americans less free financially, having the opposite effect of what was intended.

"Dodd-Frank erodes the economic freedom and opportunity that empowers low income Americans to rise and generate greater shared prosperity," Committee Chairman Jeb Hensarling (R-Texas) said. "Dodd-Frank moves us away from the equal protection offered by the impartial rule of law towards the unequal and victimizing rule of political bureaucrats. Of all the harm Dodd-Frank inflicts, this is the most profound and disturbing."

Hensarling went on to say that Dodd-Frank exemplifies the "insidious belief" among those in Washington that the American people cannot be trusted to make financial decisions, so Washington must do it for them; and "Without Washington’s coercive mandates, we just might pick the wrong health plan, the wrong mortgage, the wrong financial advisor, maybe even—God forbid—the wrong lightbulb!"

According to a press release from the committee, three key takeaways from the hearing are:

• Dodd-Frank has led to a less dynamic economy and a command and control system where regulators dictate credit offerings; as a result, the freedom and individual choices of consumers are sacrificed
• Dodd-Frank has given government regulators power to not just make credit products less available and more expensive, but to take them away
• Dodd-Frank's "torrent of top-down regulations" has adversely affected small businesses, which in turn prevents opportunities to grow the economy and create jobs. The ones hurt the most by this are lower- and middle-income Americans. The costly rules imposed by Dodd-Frank have resulted in the weakest economic recovery post-World War II.

"Freedom and an effective financial services system go together," said Todd Zywicki, George Mason University Foundation Professor of Law, a panelist at the hearing. "Freedom to gain access to capital to start and grow a business, freedom to buy a home and provide for your family’s financial security, freedom to choose those whom you entrust with your hard-earned money provide the means for pursuing the American dream."

"Without Washington’s coercive mandates, we just might pick the wrong health plan, the wrong mortgage, the wrong financial advisor, maybe even—God forbid—the wrong lightbulb!"

The perceived lack of transparency on the part of those who created Dodd-Frank and those who enforce it today was also a major topic of discussion during the hearing.

"[T]he corporatism enshrined in Dodd-Frank is sharply at odds with the commitment to transparency and competition that has always been the hallmark of American financial regulation," said Professor David A. Skeel, University of Pennsylvania Law School, another panelist. "Even apart from the adverse economic effects, it offends our sense of fair play when regulation takes place behind closed doors and with little opportunity for meaningful scrutiny."