Hatch Calls on Secretary Geithner to Delay Implementation of Dodd-Frank
Lack of Global Coordination for Regulatory Reforms Puts U.S. Financial Institutions at Competitive Disadvantage
WASHINGTON - To ensure U.S. financial institutions are not placed at competitive disadvantage, U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, called on Treasury Secretary Timothy Geithner to delay the implementation and rulemaking of Dodd-Frank. In a letter on Friday, Hatch noted outstanding issues surrounding the global coordination of the new regulatory framework and said that until the U.S. receives assurances from international partners to adopt similar reforms it was imperative to postpone the new regulations.
Below is the full letter Senator Hatch sent to the Secretary on Friday:
The Honorable Timothy F. Geithner
Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Dear Secretary Geithner:
As the Ranking Member of the United State Senate’s Committee on Finance (“Committee”), I have an obligation to consider the impact that federal policy has on America’s international economic competitiveness, and the impact that those policies have on international trade and federal revenues. The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) contained hundreds of provisions requiring or allowing federal rulemaking through the newly created Consumer Financial Protection Bureau in the Department of the Treasury (“Department”). I have real concerns that a lack of due diligence in the implementation of Dodd-Frank will result in unduly burdensome regulations that will undermine the competitiveness of our domestic financial industry, putting our nation at odds with our trading partners and placing further strain on an already stressed corporate tax structure.
A recent report from analysts at the British investment branch of JPMorgan Chase highlighted the anti-competitive impact of these regulations. The authors concluded, “[w]e agree with the views expressed by some members of the Senate on the potential negative impact the restrictions on market making related activities rules might have on the competitiveness of the U.S. financial services sector.” While I support well-reasoned efforts to strengthen our financial system, if implementation is rushed, the Administration risks crippling our financial institutions by making them uncompetitive and less able to provide the vital services imperative to a robust and sustained economic recovery.
The goal of global financial stability is one that can be shared by our trading partners, and the adoption of common regulatory standards by competing nations is essential to a level playing field. We can certainly be in agreement that international regulatory disparities would be tremendously harmful to our nation. Yet, I am concerned that regulations implementing Dodd-Frank are now being drafted without adequate consideration of the possibility that they will push financial activity to foreign banks that fail to adopt similar regulations.
It is critical that the Committee receive updates as to whether our trading partners and international financial organizations are enacting reforms consistent with our interests, particularly given that many individuals indicate that aspects of the Dodd-Frank Act closely align with ongoing efforts of G-20 nations. Last November, the White House Press Secretary released a G-20 fact sheet which stated, “[t]he U.S. is working closely with the European Union and others to ensure that the G-20’s ambitious agenda for regulatory reform is implemented.” Additional reports indicate that the administration is in the continued process of consulting with G-20 countries to advance the goals of international regulatory reform.
In order to facilitate proper Senate oversight of the implementation of the Dodd-Frank financial framework, I respectfully request that you provide my office with the following information:
1) Have formalized consultations occurred with G-20 nations regarding implementation of provisions and principles included in the Dodd-Frank Act, including the Volcker rule?
2) Whether any provisions of the Dodd-Frank Act are unlikely to become part of the international financial regulatory framework, and reasons why.
3) Information as to whether the administration believes that failure of G-20 nations to adopt similar provisions to the Dodd-Frank Act will place US financial institutions at a competitive disadvantage with their foreign competitors.
4) Details on any action the administration has undertaken in furtherance of the International Policy Coordination section of the Dodd-Frank Act.
5) Dates which the administration believes G-20 nations will formally adopt and implement provisions akin to the Volcker rule.
There are significant outstanding issues surrounding global coordination of this regulatory framework. I strongly believe that these concerns demand delay of further implementation and rulemaking of Dodd-Frank Act provisions until and unless we receive assurances that international partners agree to adopt similar regulatory reforms. Otherwise, we are guaranteeing that our financial institutions will be placed in the untenable situation of competing with international institutions whose host countries refuse to be burdened by the same constricting framework which we so readily heaved upon ourselves.
Thank you for your prompt attention to this matter. I would appreciate your working with my staff to discuss these issues before April 28, 2011.
Orrin G. Hatch