The surest sign that you are losing an argument is when you resort to making things up.
By that standard, the House Financial Services Committee is losing pretty badly.
But the promised government savings are totally illusory and the OFR claim is both disingenuous and dishonest.
To be clear, I'm not saying the Dodd-Frank Act is perfect or that there shouldn't be efforts to guard against some of the unintended consequences from its enactment.
But the way the Financial Services Committee seems to be approaching these problems is senseless. If the panel wants to be taken seriously, this isn't the way to go.
Let's take the two issues separately.
Late Wednesday, the panel passed a bill along party lines that would repeal the government's authority to wind down large, failing financial institutions. The bill has absolutely zero chance of actually becoming law—the Senate would never approve it and President Obama would never sign it.
But this was a symbolic vote meant to show that the GOP was serious about reducing the deficit and ending government bailouts of banks. On paper, the Republicans were bolstered by the Congressional Budget Office, which estimated that the Dodd-Frank resolution authority would cost the government $22 billion over 10 years.
The problem? The bill wouldn’t actually save the government anything. The CBO estimate is based on the idea that if a large firm fails, the Federal Deposit Insurance Corp. must borrow money from Treasury to ensure its orderly resolution.
During debate on Dodd-Frank, then FDIC Chairman Sheila Bair wanted to create a resolution fund – maintained by assessments on banks – that would be used for precisely this purpose. But Republicans at the time objected to the fund, and in an effort to secure GOP votes in the Senate, it was scratched.
Instead, the final law allows the FDIC to borrow from Treasury, but then requires the agency to assess banks after the fact, recouping all costs. The CBO said last year this provision would cost the government $22 billion – but only because it was looking at the issue from a 10-year time frame, not because it did not think the government would be repaid eventually. In other words, the CBO never said that the government wouldn't get its money back, just that by the time a large failure occurred and the industry was assessed, it wouldn't happen within a decade. (The Wall Street Journal reaches the same conclusion here.)