Three years ago, President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act ( Pub. L-11-203). When it was passed, it was a long 2,319 page piece of legislation. Although financial legislation can be tricky, Sarbanes-Oxley (2002) was only 66 pages and Gramm-Leach–Bliley (1999) was 145 pages. This contemporary financial legislation was legislatively loquacious compared to the Federal Reserve Act (1913) that took 31 pages or Glass-Steagall (1933) that was 33 pages.
But much like Obamacare (the misnamed Affordable Care Act), the bloated Dodd Frank bill delegated bureaucratic the authority to write implementing regulations. Currently, Dodd-Frank is comprised of 13,789 pages of rule-making from ten different regulatory agencies.
Winston Churchill rightly reflected that: “When you have 10,000 regulations, you destroy all respect for the law.” Compliance to the bureaucratic diktats of the Red Tape State increases costs on everyone. Companies contort themselves to comply but find that the Executive Branch can postpone crucial aspects of laws like the employer mandate of Obamacare on the President’s whim or for political reasons.
One of the unique aspects of Dodd-Frank is finally being fulfilled after the Senate compromise to keep the shell of a filibuster. To prevent Senate Majority Leader Harry Reid (D-NV) from using the “Nuclear Option”, Republicans allowed Advise and Consent votes on several Cabinet nomination as well as formally approving Richard Cordoray, who was unconstitutionally made a recess appointment by President Barack Obama in January 2012, as the head of the Bureau of Consumer Financial Protection.
The BCFP could not formally come into being until the Director passed Senate confirmation, which was delayed for two and half years. Republicans had been holding out on confirming the BCFP Director to encourage a decentralized organizational structure. The implementing legislation gives the Bureau of Consumer Financial Protection its own funding mechanism which is funded through the United States Federal Reserve. So the Dodd Frank can finally implement an agency that can write and enforce bank rules, conduct bank examinations, monitor financial markets, as well as collecting and tracking consumer complaints without being beholden to elected officials with power of the purse strings. This legislative leviathan may prove to become a political Frankenstein which threatens our constitutional Republic.
What can be done to avoid such governing monstrosities again?
- Firstly, either abolish or reorganize the Bureau of Consumer Financial Protection to have an Executive Board rather than a Consumer “Czar” and be financially responsible to the legislative branch rather than being an “independent” branch of government.
- Secondly, while it might seem kind of quaint, but to follow the Constitution. Can the legislative branch actually delegate lawmaking authority which is not responsible to any elected official? Why is it that bills which raise revenue are continually first conjured in the Senate, when the written organic law of our Republic requires them to start in the People’s Chamber i.e. the House of Representatives.
Two ways of handling this would be for lawmakers to attribute what clause of the Constitution corresponds to each part of the law. Or having some Congressional Constitutional Majordomo to scrutinize clauses for constitutional compliance.
- Thirdly, Congress need to stop rushing legislation. When he first ran for President in the 2008 cycle, Mr. Obama promised that: “As president, Obama will not sign any nonemergency bill without giving the American public to review and comment on the White House Web site for five days.” So much for that promise. Speaker John Boehner repeatedly promised that all bills would be put on line for 72 hours before being voted upon. This pledge has been repeatedly broken. These Federal politicians need to live up to their political pledges or be held accountable at the ballot box rather than accepted as the standard practice of the Cocktail Party in the District of Calamity (sic).
- Fourthly, as the Federal Reserve Act and Glass-Steagall show, important financial legislation can be implemented without needing a backhoe to lift the printed bill. Congress should pass legislation that is no longer than 50 pages long. This is longer than some Tea Party type legislators advocate, but it is readable by the Member and can accommodate for the complexities of contemporary government.
- Finally, the Congress must Enact legislation to take control over expensive Executive Branch regulations. It is understandable that members of Congress are not going to have expertise in complex areas of governmance, like the financial industry and the environement. But they must not cede authority to smug technocratic bureaucrats who are given wide deference by the judiciary and are not beholden to the ballot box.
In 2011, the House passed REINS, Regulations from the Executive In Need of Scrutiny Act, which required Congressional approval for any regulation that has the aggregate annual cost of compliance of $100 million or more. Alas, this common sense legislation was left to die in the Senate.
Compliance costs with the legislative leviathan is strangling growth in the American economy and is chipping away at household budgets. The REINS legislation could be enhanced by adding a 5 year sunset provisions to any costly regulation which could be reapproved by Congress. This would rein in an overzealous Executive Branch in issuing regulations as well as tempering the bureaucratic beast.