Dodd Bill Punishes Main Street Entrepreneurs, Rewards Fannie and other High Rollers
Washington, D.C., March 15, 2010—With the focus this week on
health care’s “home stretch” and concerns about government limiting the ability
of ordinary Americans to make choices about medical treatment, another threat
to freedom is accelerating this week that could harm Americans’ abilities to start
a business, invest for retirement, and get affordable home and auto insurance
policies. Today, after abruptly shutting down earnest negotiations with Senate
Republicans, Senate Banking Committee Chairman Chris Dodd announced a partisan
so-called financial regulatory reform bill that he will try to ram through his
committee within a week.
Dodd’s bill will do nothing to put restrictions on two
entities that were proximate causes of the housing bubble, the
government-sponsored Fannie Mae and Freddie Mac, and will instead hit Main Street
businesses and entrepreneurial firms that had nothing to do with the crisis.
The bill’s provisions would penalize the corporate structure of public
companies from Google to Warren Buffett’s Berkshire Hathaway, tax prudent banks,
stable home and auto insurers and their policy holders to pay for the bailout
of the next Lehman or AIG, depress revenues from incorporation
fees in Sen. Harry Reid’s Nevada and Vice President Biden’s Delaware by
federalizing corporate governance laws, and put thousands of retailers who
issue gift cards or even offer layaway plans under a new Federal Reserve
bureaucracy to regulate credit.
The one virtue the Dodd bill has is making the President of
the Federal Reserve Bank of New York
subject to Presidential nomination and Senate confirmation. But that will not
fix the bill’s many other provisions giving the Federal Reserve direct
regulatory power over thousands of America’s big and small businesses
without more transparency and accountability for the entity itself.
Read highlights of the
Dodd bill’s main economic provisions here.
CEI is a non-profit, non-partisan
public interest group that studies the intersection of regulation, risk, and