MSGP supports bill to better tailor SIFI regulation


November 30, 2016


MSGP supports bill to better tailor SIFI regulation

Please see this letter submitted today to the members of the House Financial Services Committee. This is a pro-growth, pro-small-business bill.

 

November 30, 2016

The Honorable Blake Luetkeyemer
2440 Rayburn House Office Building
Washington, DC 201515

Main Street Growth Project (MSGP) supports H.R. 6392, the Systemic Risk Designation Improvement Act of 2016. MSGP promotes pro-growth, non-cronyist financial regulation.

I agree with former House Financial Services Committee Chairman Barney Frank who said the $50 billion threshold for systemically important financial institutions (SIFIs) “was a mistake” and that the threshold was “too low.” I’d add another mistake: Creating a threshold based solely on asset size, especially at a relatively low level like $50 billion.

There are 36 banks that meet the $50 billion threshold and are thus labeled SIFIs. The Treasury defines SIFIs as those firms whose “distress” could “pose a threat to the U.S. financial stability.” Financial markets do not, to put it mildly, share this view for each of these firms. Of course, this entire issue would be easier if bankruptcy laws were reformed to allow big banks to restructure, but that’s a matter for another day.

While the Dodd-Frank Act does allow for some ‘tailored’ regulation of each SIFI, H.R. 6392 will help more small businesses get loans. That’s the real goal here. The banks involved are important conduits for allocating capital, but the bill’s real beneficiary is the would-be entrepreneur who wants to open her own nail salon in an empty storefront, likely in one of the many towns that haven’t seen much in the way of economic recovery. New business starts are the key to economic growth, and yet the Dodd-Frank Act has been shown to harm the growth of small loans (while big business loans recovered quickly from the recession). The graph below is why I’m writing this letter, and it’s why I encourage Congress to pass this bipartisan, pro-growth, pro-small-business bill.

screen-shot-2016-11-30-at-5-57-39-pm

Regards,

Kyle Hauptman
Executive Director
Main Street Growth Project

 

 

 

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MSGP advocates for common-sense financial regulation reforms. We’re on the side of Main Street businesses, workers, savers and investors.

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