WASHINGTON, D.C. – Congressman Robert Hurt (R-Virginia) gave the following statement at a Financial Services hearing entitled, "The Dodd-Frank Act's Impact on Asset-Backed Securities" held today by the Capital Markets Subcommittee, on which Hurt serves as Vice-Chair. You may view the video of his opening statement by clicking the image below or clicking here.
"In the wake of Dodd Frank, we have continued to see costly, unintended consequences arise from regulations that were poorly devised and implemented. These regulatory impacts represent real costs to consumers – both families and small businesses– on Main Streets in every congressional district.
"With the recently finalized Volcker Rule, we began to see these consequences almost immediately after it was released as community banks were faced with taking large write downs. While the joint regulators eventually corrected this error, there are still several other Volcker-related issues yet to be resolved, most notably with respect to CLOs and asset-backed securities.
"In Virginia's Fifth District, our district, many companies rely on the CLO market to finance their operations, including a financial information firm headquartered in Charlottesville with over 2,600 employees and an auto parts manufacturer in Southside. These companies, however, like so many others across the country, face increased costs as the CLO market reacts to the Volcker Rule's treatment of CLOs as 'covered funds.'
"I think most would be hard-pressed to characterize financing the operations of these Virginia companies as 'hedge fund-style high-risk trading.' Yet, according to one of the Volcker Rule's Senate sponsors, the purpose of the provision was to put a firewall between banks and exactly these activities. While that may have been the original intention, we now see how a flawed rule written in a flawed process can extend well beyond its original confines and impact our communities.
"I appreciate the bipartisan group of members to correct this misapplication of the Volcker Rule and look forward to its resolution.
"I look forward to your testimony. Thank you, Mr. Chairman. I yield back the balance of my time."