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33 » VISIT US ONLINE @ DSNEWS.COM by the Dodd-Frank Act in 2010 is the primary reason for the slow growth this country has experienced since 2010. Later in this testimony, I will show that the new regulations imposed on banks—particularly small banks—has created a bifurcated economy," Wallison said. "Large firms in the real economy, which can access the capital markets for financing, have been growing roughly in line with previous recoveries, but smaller firms that rely on banks for financing are growing far more slowly. Since most of the growth in the US economy, and especially in employment, comes from small firms, the economy is underperform- ing and will continue to underperform until the treatment of banks under Dodd-Frank Act is substantially modified or repealed." Gramm, a Republican former Senator from Texas, also said he believes Dodd-Frank gave regulators too much power. "Much of our slow growth is not just a prod- uct of mounting regulatory burden but of legisla- tive and executive actions that have empowered regulators to set rules rather than implement rules set by Congress," he said. "Dodd-Frank has undermined a vital condition required to put money and America back to work—legal and regulatory certainty." In his opening statement at the hearing, Committee Chairman Jeb Hensarling (R-Texas) asserted the massive 2,300-page law "launched a salvo of consequences that have crippled growth," and that Dodd-Frank hit Main Street when it was intended to reform Wall Street. As Gramm pointed out, the effects of the "failed recovery" were manifested in the banking system; the FDIC said 1,341 banks failed since 2010, while only two new banks have been char- tered in the last five years. "It has had pernicious effects on small businesses and community financial institu- tions which are the lifeblood of the Main Street economy. Community banks and credit unions supply the bulk of small business and agricultural loans, but the combined weight of Dodd-Frank's 400 regulations is dragging them down," Hensarling said. "We are losing on average one community financial institution a day." Miller, the Democratic former North Caroli- na Congressman, admitted there was more work to be done as far as creating an economy that allows Americans to grow and prosper. But he stood in defense of Dodd-Frank at the hearing. "Dodd-Frank was a compromise and reform- ers did not get all we wanted, but it was probably all that was possible at the time, given the in- dustry's continued enormous clout in Washing- ton, even while the industry stood in complete disrepute among the American people," Miller said. "We are better off, and more prosperous, than we would be without it."

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