Despite a bipartisan vote last week, Rep. Maxine Waters (D-Calif.), the ranking member of the House Financial Services Committee, and HFSC Republican Chairman Jeb Hensarling continue to dispute the effectiveness of the Dodd-Frank Act.
After the Wednesday vote, Waters praised the “bipartisan nature” of the vote but criticized a statement made by Hensarling the previous evening. Hensarling said that Dodd-Frank “enshrined a ‘too big to fail’ bailout scheme into law,” a claim that has been made by numerous Dodd-Frank critics, American Banker reports.
Waters objected to Hensarling’s statement, saying that the FDIC’s new authority allows it to wind down failing financial giants.
“Dodd-Frank specifically ends too-big-to-fail by prohibiting the bailout of a failing financial institution,” Waters said, according to American Banker. “In fact, it mandates the orderly liquidation of such an institution, in which its executives are dismissed and its shareholders are wiped out. The point of this process is to allow institutions to fail without causing catastrophic damage to the larger economy, other companies, small businesses, American taxpayers and American families. We have much work to do, and I sincerely hope that we establish a fair representation of the facts as the basis for a sound, bipartisan working relationship.”
Waters has indicated recently that one of her top priorities is to protect Dodd-Frank from efforts by critics to water down the controversial law. Republicans maintain that the legislation is overly complex and burdensome for financial institutions.