After the Great Recession, Americans had hoped for the historic post-recession bump that our economy has always experienced. Grounded in unending American optimism, we were primed and prepared to regain our economic foothold and put Americans back to work.
Unfortunately, Washington had different ideas. Capitol Hill leaders argued the economy had slowed because bureaucrats hadn’t protected it with enough regulations, taxes or mandates. They did the exact opposite of what the economy needed, imposing a laundry list of policies that siphoned off the certainty and predictability that encourages investment.
One item on that list was the 2,300 pages of red tape passed in the waning months of the Democratic-controlled Congress in 2010. Named after its authors, Sen. Chris Dodd of Connecticut and Rep. Barney Frank of Massachusetts, this legislation was full of provisions harassing everyone from real estate agents to auto dealers to banks.
Yet, we know Washington regulations don’t create jobs. If we truly want to expand the earning power of American workers, we must encourage investment to grow our economy. That starts with protecting us from the central planners in Washington who continue to stifle lending.
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Recently, a bipartisan effort in both houses of Congress did just that by amending an unneeded and duplicative Washington regulation. Section 716 of Dodd-Frank would have prohibited banks from mitigating risk by forcing them to push out commodities swaps. This after-thought of financial reform was considered so extreme and unnecessary that Frank didn’t include it in the original House version of the bill.
Economic growth is created through access to capital, the life-blood that allows innovators and entrepreneurs to create jobs. By recently fixing Section 716, Congress worked together to encourage banks to invest in American businesses. This fix actually makes banking safer — specifically, the commodities markets for agriculture and energy producers — while not exposing the American taxpayer to further liability.
This is not to be confused with the transactions that are blamed for the 2008 meltdown — those infamous credit default swaps on subprime mortgage-backed securities remain prohibited.
Contrary to the myth that this amendment was stuffed into the spending bill at the last minute, this was perhaps the most bipartisan and thoroughly debated change to Dodd-Frank to date. After debate and passage by the Financial Services and Agriculture Committees, the full House debated and passed it in 2013 as a stand-alone bill; 70 Democrats joined Republicans for a veto-proof majority. Then, this year the Appropriations Committee passed it as an amendment to the spending bill. Finally, again after full debate, the House passed it twice more before it was finally signed into law by President Barack Obama.
The Bipartisan Policy Center hailed its passage as an example of a smart regulatory achievement that fixes a “costly and unnecessary” provision.
Now that this proposal has been signed into law, perhaps this is a model to show how the two parties can work together to put the economy and American workers ahead of over-regulation and Washington control. It’s time to begin investing in America again.
Rep. Kevin Yoder of Overland Park represents the 3rd District of Kansas in the U.S. House.