Carly Fiorina in Manchester

Olivia Zink on December 11, 2014
Carly Fiorina responds to question on crony capitalism.

Question: Back in April, Mike Lee, a senator from Utah, spoke here about business problems and issues. One of the things he said is that America has a growing crisis of crony capitalism and corporate welfare policy and privilege. As a former CEO of a successful corporation how would you prevent corporate cronyism from corrupting our government and our economy, our business?


Answer: Thank you so much for your warm welcome. Crony Capitalism is a real problem. It’s a real problem because big business and big government feed off of each other. There are some who would argue that the answer to crony capitalism is more big government. I think the data is pretty overwhelming that more big government makes crony capitalism worse, not better, because only big business can deal with big government.


So let me just give you an example: Dodd-Frank. Whatever you think of Dodd-Frank, first of all, understand that Dodd-Frank, the Affordable Care Act, any piece of legislation that comes out of Washington DC is incredibly complicated. Dodd-Frank is no exception. The legislation itself was incredibly complicated. Then there’s tens of thousands of additional pages of regulation. But what’s the indisputable consequence of Dodd-Frank? 10 banks too big to fail have become 5 banks too big to fail. Those 5 banks are now engaged in intensive ongoing discussions with the government about every single aspect of their operation. They may not like that, but there’s no question their competitive position has been strengthened, not weakened: there are 5 of them, not 10 of them, and record bonuses have been paid for the last 3 years. I’m not blaming the people in that business, it’s just a fact.


What has happened in the meantime as well? The community banking system is on it’s back. And why is the community banking system so important? Because where do most families and family owned businesses and entrepreneurs get credit? From a community bank. Everybody gets all excited about venture capital and private equity and they are wonderful things, but the truth is 3% of new businesses in this country get their money from VCs or private equity. 3%. 97% get their credit, get their helping hand, get their chance from the community banking system. And the community banking system is on it’s back because it can’t handle all this regulation. They just can’t. And so what you see happening is community banks trying to consolidate. Community banks closing up. By the way, we’re seeing the same thing in the health-care business. You see it here in New Hampshire. Rural hospitals are struggling. What do you suppose is going to happen to all of the hospitals and doctors who are suddenly out of network here in New Hampshire?


If you’re big, you get bigger. If you’re not so big, you go out of business. That’s the impact of big government, and I think the data is crystal clear.

So the answer to crony capitalism is not more regulation. It is less. Level the playing field. It’s not to say there shouldn’t be some regulation. Of course there should be. But I think we need to re-examine, literally every reg on the book. Every piece of legislation. Have we ever done that it 50 years? I doubt it. I think we have to re-examine every one from the point of view of what does it do to a small business.


I think we have to have people in Washington, Frank [Guinta] is one of them, who think about small businesses before they think about big business. Small business, entrepreneurs don’t have a lot of power in Washington and yet they power our economy.

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