The Right CHOICE
Washington, May 23, 2017
By Rep. Barry Loudermilk (R-GA)
Op-ed run exclusively in the Atlanta Business Chronicle
Growing up as the son of a construction superintendent meant my summer breaks were spent on a job site carrying lumber, pushing wheelbarrows full of concrete, or one of the many other tasks of a construction laborer. When my father decided to leave the company where he worked for many years and set out on his own, his dependency on my help increased.
During my last two years of high school, I worked most every weekend and some evenings after school. Often, I would leave a rigorous football practice and drive to the job site to help my dad until well after dark. Today, some may think that working a teenager that hard is unfair and abusive, but back then, when the family needed help, everyone pitched in.
Although the housing market was struggling, my dad, who was known for the quality of his work, had plenty of jobs. Unfortunately, while his popularity should have led to a very successful business, it actually led to its failure because he had more jobs than employees to complete the work.
Once, on our drive home after a hard weekend of work, I asked why he didn’t just hire more carpenters. He explained that in construction the customers don’t pay until certain parts of the jobs are completed, and sometimes not until the entire job is done. He said, “Every dollar I get paid right now goes to pay employees and buy the products for the next phase of these jobs.” My father was facing the one issue that hinders so many nearly successful small businesses - cash flow.
When I asked why he didn’t ask the bank for a loan or a credit line, my father said, “I did, but they turned me down.” He then said, “In order to borrow money from a bank, you have to prove you don’t need it.” Without access to the financing he needed to sustain the business, my dad finished the projects he started, closed the company, and moved the family to another state, where he found work as a carpenter.
Today, thousands of small businesses are facing the same issue that brought down my father’s business nearly forty years ago. New government regulations, brought on by legislation like Dodd-Frank, have effectively stripped away a bank's ability to determine the loans they approve.
Ronald Reagan said, “The most terrifying words in the English language are, I’m from the government and I’m here to help." These words adequately describe how Congress attempted to fix problems the federal government created within the financial services sector.
The Dodd-Frank Act was passed in the shadows of the most devastating economic recession in our lifetime. After Congress forced taxpayers to bail out big banks at a cost of over one trillion in taxpayer dollars, the same Congress passed Dodd-Frank under the guise of ending “too big to fail” and protecting consumers. However, the results of Dodd-Frank have been the exact opposite, as big banks are bigger and small banks are fewer. In addition, formation of new local community banks, relied upon by thousands of small businesses, is virtually nonexistent.
Dodd-Frank has hit Georgia’s financial sector particularly hard. During the financial crisis, Georgia lost more banks than any other state, leaving small businesses and individuals scrambling to find other banking options. Now, several years after the recession officially ended, there are still forty-seven Georgia counties without a local community bank, and three counties with no bank branch at all. The lack of new local banks arising to fill this void is predominately due to the 400 massive new regulations brought on by Dodd-Frank and the sluggish economic conditions that have followed.
Not only are these regulations holding back the resurgence of locally owned banks, the centralized controls regulating loan practices are prohibiting banks from working with customers to give them access to capital to grow their businesses, buy a home, or purchase a new car. Dodd-Frank has imposed such stringent requirements on approving financing that businesses are once again experiencing the crisis that led to the demise of my dad’s business - to get a loan, you have to prove you don’t need it.
Dodd-Frank has effectively closed off the world’s most powerful economy to entrepreneurs and small business owners. Dodd-Frank prohibits the small guy who can’t afford to comply with these massive regulations from accessing the financing he needs.
Today, Congress is working on legislation that will reverse this process and, once again, sow the seeds of prosperity on Main Street, not just Wall Street. The Financial CHOICE Act, which is working its way through the House of Representatives, unleashes our economic potential by fostering pro-growth policies and choices for everyone.
It repairs the damage to the economy done by Dodd-Frank, ends taxpayer-funded bank bailouts, and levels the playing field, so community banks can be competitive again. The CHOICE act will create more financial opportunities for innovators, entrepreneurs, and small businesses, which equates to more and better paying jobs for Americans.
We should no longer accept the status quo of lackluster growth and a sluggish job market – we must create a 21st century economy, open and accessible to every single American.
The Financial CHOICE Act replaces overregulation with smart regulation, creates an environment favorable to establishing more local banking options, and brings power to each individual consumer to make their own financial decisions. We must seize this opportunity to reform our nation’s financial system - opening a fair, free economy for all our citizens.