A Responsible Regulatory Framework Needed

Moving forward, it's vital that we make the necessary reforms to our financial regulatory framework, but the President's proposals miss the mark.

First of all, he proposes expanding the role of the Federal Reserve – the big spender that has pumped about $8 trillion of your money into Wall Street’s bailout with just about no accountability, oversight, or transparency. Turning the Fed into a super-regulator is not the answer.

But, he also proposes a new agency that will give government bureaucrats the task of deciding which financial products are suitable for consumers. This proposal raises more questions than it answers.

Is it really in the best interest of consumers to have a DC bureaucracy dictate what financial products can be sold in our nation? And, should we expect it to operate with the efficiency that the FDA has demonstrated in approving new medical and health products? Will this result in long delays before consumers can access different sources of financing? All the while, consumers would be forced to wait anxiously for the government to approve that mortgage or small business loan that could best suit their needs. How can we be sure that the agency will not become a slow, bureaucratic behemoth – something that regrettably has characterized many a government agency?

Furthermore, I have serious misgivings that the President’s proposal disconnects the mission of consumer protection from that of safety and soundness within the framework of this agency. If the agency’s sole focus is on consumer protection without consideration for broader issues of safety and soundness, that could result in new consumer protection mandates that simultaneously weaken larger financial protections. The last thing we need is another government agency with tunnel-vision – that is already one of the problems within the existing financial regulatory framework.

Republicans have an alternative solution. Our plan requires regulators to streamline disclosures, and provides them with more investigative and enforcement tools. This includes increasing both civil and criminal money penalties in government enforcement actions; maximizing restitution to victims of fraud; improving surveillance of bad actors who exploit gaps in the current regulatory regime to continue preying upon innocent consumers; and allowing regulators to share information with foreign regulators and law enforcement agencies engaged in the investigation and prosecution of financial frauds without waiving privileges.