By Rep. Bob Goodlatte
R-VA 6th CD
The free flow of money is fundamental to our capitalist system and the entrepreneurial spirit that defines America. Investors vote with their wallets and the best ideas prevail. However, this only works when the government does not inject itself into otherwise private matters.
Abuses have occurred recently in our financial industry and they must be addressed. Unfortunately the legislation which House Democrats pushed through last week will only perpetuate mistakes that have already been made. As America continues dealing with the sluggish economy and unemployment hovers around ten percent, the House passed, without my support, the so-called “Wall Street Reform and Consumer Protection Act”, which will expand government at the expense of families and small businesses.
Specifically the legislation allows a team of federal bureaucrats to decide if a private business poses a risk to the economy. The legislation would allow the federal government to take over those private businesses and would even give the government the right to sell off the businesses' assets.
While the alleged purpose of this bill is to prevent a concentration of money and power in a small number of large corporations, the bill would have the opposite effect. Knowing that the federal government will swoop in and take over any companies that it deems "too big to fail," creditors and investors will be drawn to lend money to the largest corporations because of the implied guarantee that the federal government will step in to repay these loans. The natural flow of capital will thus be interrupted and flow to the largest corporations rather than to small businesses and entrepreneurs with good ideas, which are the true innovators and job creators of the U.S. economy.
Additionally, the legislation expands the reach of government in the marketplace by creating several new bureaucratic offices and agencies, including a Consumer Financial Protection Bureau and an Office of Financial Research. These government offices will have broad authority to impose burdensome regulations on any business that lends money, extends credit, or enters into repayment plans with consumers. These new federal regulations would hit everyone from doctors and hospitals to furniture and department stores.
To address the need for reform of the financial industry, I am a strong supporter of the Consumer Protection and Regulatory Enhancement Act. Rather than guarantee future government bailouts, this legislation would force companies to bear the responsibility of their bad decisions, rather than force taxpayers to pick up the tab. It would do this by creating a new chapter of the bankruptcy code to make it more efficient and better suited for resolving these issues. This legislation would also ensure consistent enforcement, accountability and transparency by modernizing the current federal financial regulatory agencies overseeing our nation's financial institutions.
Congress should not be passing over-reaching legislation like the so-called “Wall Street Reform and Consumer Protection Act”. Instead government must make it possible for small businesses and entrepreneurs to access capital to innovate and create the jobs that are so desperately needed today.
To contact me about this or any other matter, please visit my website at www.goodlatte.house.gov.