Senate confirmation hearings begin Feb. 13, for Jack Lew, President Obama’s nominee to replace Timothy Geithner as Treasury secretary. What specific questions should the senators ask? Read more
Mr. Lew, after the recession ended in June 2009, the U.S. gross domestic product grew at an annual rate of 2.5 percent until July 2010, when the president signed the Dodd-Frank Act into law. Since then, the annual rate of G.D.P. growth has been 2 percent or less. The reasons for this are not hard to find.
Making significant reforms to Dodd-Frank, so that financial institutions will have some confidence about their future obligations, will be difficult.Dodd-Frank is the harshest regulatory law ever imposed on any industry. To be operational, it requires almost 400 new regulations. Of these, fewer than half have been finalized in the two years since the law’s enactment. The most important regulations, like the Volcker rule and the regulations that will govern the mortgage market, have generated so much conflict among the regulatory agencies that these rules have not been promulgated in final form. When they are finalized, the legal and constitutional challenges already threatened or filed will extend the uncertainties about the rules for many more years.
If you are confirmed as Treasury secretary, the health of the U.S. economy will be your principal concern. The long-term unemployment this nation has endured since the end of the recession in June 2009 has not only contributed to our deficit and debt, but now threatens to make large numbers of Americans unemployable because they have lost the work skills that our innovative economy requires. This is a serious crisis, and seems to have its source in the Dodd-Frank Act. It’s time to consider whether Congress went too far.
Clearly, making significant reforms to Dodd-Frank, so that financial institutions will have some confidence about their future obligations, will be difficult. The president sees this as a major success of his first term. But in light of its adverse effects on the economy, shouldn’t you be prepared to tell the president that a serious review of Dodd-Frank is necessary?
Peter J. Wallison is the Arthur F. Burns fellow at AEI.