“If businesses find it harder to borrow, it will be harder for them to make capital investments and create jobs; if consumers have less access to credit, it will be harder for them to care for their families; and if the value of the assets held by savers and investors declines, people will find it harder to save for a new home, for college or retirement,” HFSC Chairman Spencer Bachus said.
The hearing will focus specifically on how the legislation’s derivatives reforms and Volcker Rule ban will affect American consumers, investors and job creators. Subcommittee Chairman Scott Garrett said that the legislation must not hinder job creation or growth.
“In order to get people back to work and the economy humming again, our financial institutions must be able to raise capital, and consumers and small businesses must have access to credit,” Garrett said.
The derivatives provisions under Dodd-Frank will affect many of the nation’s non-financial businesses. Derivatives are used by various industries, including farming and local government, to manage exposure to risks like interest rate and exchange rate fluctuations.
Additionally, the legislation’s Volcker Rule will have far-reaching consequences, which will also be discussed at the hearing. Under the rule, banks are prohibited from engaging in proprietary trading—or risky investments with client funds. Banking industry participants have argued that the rule will damage liquidity, as well as the ability of U.S. firms to compete in a global economy.
Since January 2011, the HFSC has held 62 Dodd-Frank-related hearings to examine provisions of the legislation that could hurt American businesses, consumers and investors. The HFSC has heard from more than 340 witnesses over the course of these hearings.