Jon Huntsman President 2012

FINANCIAL
REGULATORY REFORM

Dodd-Frank's replacement should follow two principles: failure is the best form of risk management, and maximizing transparency leads to more efficient and fairer financial markets.

REPEAL DODD-FRANK

Governor Huntsman believes that Dodd-Frank was an inappropriate regulatory response to the Panic of 2008. The legislation, signed into law by President Obama in summer 2010, ignored the government’s pervasive role in causing the crisis, assures future transfers from taxpayers to bankers by institutionalizing a government backstop for too-big-to-fail firms, and imposes massive new regulations and unreasonable compliance costs on smaller financial firms. As a result, lending to small businesses from small banks has suffered.

There is no better example of the perverse incentives of Dodd-Frank than Bank of America’s decision this fall – when faced with a credit downgrade – to move part of its derivatives book from Merrill Lynch to another subsidiary that was covered by FDIC insurance. The move was possible only with the agreement of the FDIC, the Federal Reserve and the Treasury Department.

Once too-big-to-fail is ended and we have implemented true derivatives reform, Governor Huntsman believes that Dodd-Frank should be repealed. Its replacement should follow two principles: failure is the best form of risk management, and maximizing transparency leads to more efficient and fairer financial markets.

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