As Congress prepares to vote on debating Senate Banking Committee
Chairman Chris Dodd’s “Restoring American Financial Stability
Act,” and speculation is rampant as to whether Republican can
hold together a filibuster to force changes the to bill, a broad
spectrum of conservative and free-market groups expressed “grave
concerns” about the financial regulation bill and its negative
impact on Main Street. The letter has been signed by the
Competitive Enterprise Institute; the fiscally-conservative
Americans for Tax Reform and Americans for Prosperity; and
Phyllis Schlafly’s populist Eagle Forum. Also signing on are two
energetic new grassroots groups that speak on behalf of much of
the Tea Party movement: Tea Party Express and American Grassroots
Coalition.
The letter, included below, highlights what it calls “a
by-no-means exclusive list” of major concerns with the bill.
These include the bill’s broad definition of “nonbank financial
company” that would mean that many “Main Street non-financial
businesses would be hit with taxation, regulation, and possible
nationalization by the Federal Reserve,” the proxy access
mandates that would usurp state incorporation law and “empower
union pension funds and other progressives by forcing companies
to fund their Saul Alinsky-style campaigns for a company’s board
of directors,” and the lack of any reforms in the bill of Fannie
Mae and Freddie Mac - the two government-created mortgage giants
that were “primary causes of the crisis.”
The letter concludes: “While we believe the government should act
swiftly to punish financial fraud, it should not diminish
Americans’ choices and opportunities in the name of ‘stability.’
We believe that fundamentally, as with health care, although
there are a lot of complexities involved, this is about the
future of our country. Do we continue living in an America where
entrepreneurs and investors can launch new businesses and new
ideas - or do we live under a system in which almost every
transaction has to be approved by a government agency or czar?!”
April 23, 2010 Dear Senators Reid and McConnell, As leaders of
groups representing millions of Americans that comprise a
Center-Right Coalition, we have grave concerns about the
“Restoring American Financial Stability Act” and its negative
impact on Main Street. While we believe the government should act
swiftly to punish financial fraud, it should not diminish
Americans’ choices and opportunities in the name of “stability.”
We believe that fundamentally, as with health care, although
there are a lot of complexities involved, this is about the
future of our country. Do we continue living in an America where
entrepreneurs and investors can launch new businesses and new
ideas — or do we live under a system in which almost every
transaction has to be approved by a government agency or czar?!
Below is a by-no-means exclusive list of our concerns about
provisions that hurt Main Street.
1. Main Street non-financial businesses would be hit with
taxation, regulation, and possible nationalization by the Federal
Reserve: Defenders the $50 billion upfront resolution (bailout)
fund argue that the money would come not from general taxpayer
funds but fees on “financial institutions.” But putting aside the
fact that even taxes on big banks would be passed on to
depositors and borrowers, the bill’s definition of “financial
institution” subject to the fee and regulation by the Federal
Reserve goes far beyond a bank or stockbroker. Life, home and
auto insurers would be subject to this bailout fund fee even
though they already pay into state funds for insolvent insurance
companies, and the fee would then be passed on to their policy
holders.
The Federal Reserve would also have the power to define a
“nonbank financial company” to encompass any business it deems as
“substantially engaged” in financial activity, and experts fear
this definition could include energy companies and manufacturers
tangentially involved in finance and credit. These firms would be
subject not just to the bailout fees, but to the Fed’s new powers
of breakup and nationalization for firms it deems “systemic.”
2. “Proxy access” and corporate governance provisions would take
power from states and empower progressive interest groups — from
unions to animal rights:
Even though they have little justification in preventing the next
financial crisis, the bill contains “proxy access” provisions
that would empower union pension funds and other progressives by
forcing companies to fund their Saul Alinsky-style campaigns for
a company’s board of directors. Combined with other items
federalizing incorporation law — like a mandated majority
instead of plurality standard for director votes— this could
enable special interest activists to harm the interests of
ordinary shareholders and encourage corporate directors to cut
deals with them on things like card check, cap-and-trade, and
kicking conservative media personalities off the air.
3. What’s not in the bill — any reform of Fannie and Freddie:
The bill ignores the two of the primary causes of the crisis:
Fannie Mae and Freddie Mac. They’re bigger than ever, and the
Obama administration quietly lifted the $400 billion cap on
government backing on Christmas Eve — the “Christmas bailout” —
so now taxpayers have unlimited liability for them. A bill aiming
to prevent the next crisis is woefully insufficient without
reform of Fannie and Freddie, and could have the unintended
effect of allowing them to carry the risks that other businesses
would be barred from taking. We are happy to meet with you or
members of your staff to discuss further these vital concerns.
Sincerely,
Jennifer Hulsey, Co-Founder, American Grassroots Coalition
Dick Patten, President, American Family Business Institute
Tim Phillips, President, Americans for Prosperity
Grover Norquist, President, Americans for Tax Reform
Chuck Muth, President, Citizen Outreach Gary Aldrich, Chairman,
CNP Action
John Berlau, Director, Center for Investors and Entrepreneurs,
Competitive Enterprise Institute
Phyllis Schlafly, President and Founder, Eagle Forum
Myron Ebell, Director, Freedom Action
Colin Hanna, President, Let Freedom Ring
Amy Ridenour, President, National Center for Public Policy
Research
Lewis Uhler, President, National Tax Limitation Committee Pete
Sepp, Executive Vice President, National Taxpayers Union
William Greene, President, RightMarch.com
Jim Martin, Chairman, 60 Plus Association
Amy Kremer, Director, Grassroots and Coalitions, Tea Party
Express Lisa Miller, Organizer, Tea Party WDC
cc: The Honorable Christopher Dodd
The Honorable Richard Shelby
The Honorable Robert Corker
