Governor Brownback announced yesterday that he would allow two Kansas bills, SB 345 and HB 2505, to become law without his signature. The bills are a direct result of the Dodd-Frank Wall Street Reform and Consumer Protection Act which, among other things, requires states to adopt a new regulatory framework for financial institutions. The Governor has asked Kansas Attorney General Derek Schmidt to look into the constitutionality of the law.
“I want to thank Governor Brownback for his firm, principled stance against coercive mechanisms contained in some of the provisions within the Dodd-Frank Wall Street Reform and Consumer Protection Act,” said Commissioner Aaron Jack. “Our office remains committed to protecting investors and the integrity of capital markets by promoting transparency. Unfortunately the federal government has infused uncertainty into securities markets across the country by forcing states to adopt certain requirements without regard to the proper relationship between the various states and the federal government. Blurring these lines of government makes it harder to responsibly regulate the financial services industry,” continued Jack.
In a radio interview with WIBW today, Jack expounded on the reason why Brownback had to allow the bills to become law, even though he vigorously disagreed with the legislation: “What the federal government said through this law is ‘You will do this or else…we will do it for you.’ By not signing, the Governor exercised his right to push back…to make the statement that he believes Kansans should decide what is best for Kansas, and that we should not be a mere actor for the federal government.”
Jack agreed with the Governor’s statement that the bill was an “unprecedented expansion of federal power,” and explained why every Kansan should take an interest in Dodd-Frank: “Like Obamacare, [the impact of Dodd-Frank] is personal…Dodd-Frank attacks private property and contract rights…something many believe to be a fundamental feature of our Constitution. And while we continue to support financial reform legislation that responsibly guards against systemic risk, protects investors and increases regulatory transparency and oversight of all markets, there are several provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act that undermine the original goals for reform by creating unintended consequences that will have a negative impact on our economy; SB 345 and HB 2505 serve as timely reminders.”
The Commissioner believes the broad authority granted to the Treasury Secretary under the new law—to create new law in time of “crises” will create uncertainty. Our goal should be to seek ways to ensure more stability in the securities, banking and real estate markets. In fact, in the event of a larger financial crisis, the more we should rely on the rule of law and on our Constitution. Instead, the federal government has actually increased uncertainty by passing a law which makes it more likely that during the next financial crisis, the Treasury Secretary will begin rewriting the rules along the way.
Understanding that small businesses are vital to job growth and improving the economy, Jack says Kansas regulators have no interest in “throwing up needless roadblocks” for small businesses. “We are interested in creating ways to spur economic development and job creation,” he said. “I will continue to work with lawmakers on this issue to ensure responsible reform that strengthens Kansas’ financial system without undermining Kansas’ economic growth and job creation initiatives.”
The Office of the Kansas Securities Commissioner is responsible for registration and regulation of securities offerings and those working in the securities industry, aiding businesses in capital formation, investor education, investigation of illegal securities activities, and prosecution of securities-related crimes. For more information about the Office of the Kansas Securities Commissioner, go to www.ksc.ks.gov or visit our Facebook page.
Contact: Shannon Stone, Director of Public Information, 913.652.9164