House Advances Republican Bill to Overhaul Dodd-Frank Rules

Cornelia Mascio
Mag 9, 2017

The House Financial Services Committee on Thursday passed the Financial CHOICE Act, a sweeping piece of GOP-backed legislation that would, if approved, gut major portions of the Dodd-Frank Act and significantly limit the power of the Consumer Financial Protection Bureau (CFPB).

House Republicans moved closer to realizing their long-promised goal to undo financial regulatory laws enacted under Democratic President Barack Obama after the 2008 economic meltdown pushed the economy to the brink of collapse.

Marcus Stanley, policy director for Americans for Financial Reform, told Vox, "It's a little hard to get your mind around everything this bill does, because there's nearly no area of financial regulation it doesn't touch".

The measure will now go to the full House for a vote. Under the CHOICE Act, sponsored by Rep. Jeb Hensarling, R-Texas, the SEC must issue its own fiduciary rule that would apply to all investment advisors before the DOL can roll out its version, according to the publication. As a result of its enforcement actions, the CFPB says it has recovered $11.7 billion that it returned to more than 27 million consumers harmed by illegal practices.

Hensarling's bill would eliminate Dodd-Frank's so-called "Volcker Rule", named for the economist and former Federal Reserve Chairman Paul Volcker, which forces insured depository banks to separate their proprietary trading from consumer banking activities, essentially keeping them from acting like - and working with - hedge funds and private equity firms.

Several groups, including the National Consumer Law Center, Americans for Financial Reform, and Public Citizen, lambasted the bill's provision restricting the CFPB and Security and Exchange Commission's authority to restrict forced arbitration.

"I'll take 2 percent growth over the recession of 2008 any day of the week", Rep. Michael Capuano (D-Mass.) said, calling the bill "irredeemable" and "dead on arrival" in the Senate.

The House Financial Services Committee's ranking member Rep. Maxine Waters D-Calif. left with committee Chairman Jeb Hensarling R-Texas speaks on Capitol Hill in Washington Tuesday
House Advances Republican Bill to Overhaul Dodd-Frank Rules

The Financial CHOICE Act "is so extreme it even erases protections that predate the financial crisis, allowing Wall Street and predatory lenders to once again prey on consumers without repercussion", he added.

Although Democrats all voted against the bill, some said they were willing to give regulatory relief to community banks.

Throughout the three-day hearing, Democrats blasted Hensarling's almost 600-page plan as "immoral", calling it "poisonous" and "a deeply misguided" piece of legislation that would bring harm to American families and come to the rescue of Wall Street.

Banks support the repeal but retailers want to keep it in place, arguing that the cap keeps costs down and savings get passed on to consumers.

"The bill is rotten to the core, and simply carries water for Trump and his buddies on Wall Street", said Waters.

The Associated Press obtained additional letters that the Republican lawmaker sent to other agencies within the jurisdiction of his Financial Services Committee.

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