Financial Choice Act to Be Reintroduced by End of April

Latest iteration of Choice Act still requires DOL to promulgate fiduciary rule similar to SEC's

Rep. Jeb Hensarling. (Photo: AP) Rep. Jeb Hensarling. (Photo: AP)

Rep. Jeb Hensarling’s Financial Choice Act, which seeks to gut the Dodd-Frank Act and is set for release by the end of April, still requires that if the Labor Department promulgates a fiduciary rule, “it must be substantially similar” to one issued by the Securities and Exchange Commission.

Hensarling announced Tuesday his plan to reintroduce his Choice Act in a matter of weeks, stating in a comment provided by a spokesperson that he looks forward to “working with the president and his administration to eliminate Dodd-Frank and replace it” with the Choice Act 2.0.

On March 15, Hensarling said reintroduction of the bill would come in a matter of weeks.

The memo released Tuesday outlining what the new version of Choice Act will look like also requires the chairman of the Securities and Exchange Commission to establish an advisory committee on the SEC’s enforcement policies and practices. The advisory committee will offer recommended reforms within one year and the SEC must either codify them or report to Congress on its reasons for not doing so, the memo states. 

Another provision increases the threshold for Regulation A+ offerings from $50 million to $75 million, with a required increase for inflation (though SEC has authority to increase greater).

Rep. Maxine Waters, D-Calif., the top democrat on the committee, chided the latest version of what she dubbed the “Wrong Choice Act 2.0” for repealing the Volcker Rule, which she said “stops banks from gambling with taxpayer money.”

Another bad move, Waters claimed, is the Act’s repealing of the Financial Stability Oversight Council’s tool to designate non-banks, like AIG, as systemically important financial institutions for purposes of enhanced supervision and regulation. “Only four non-banks have been designated, and one, GE Capital, de-risked and has already been de-designated,” she said.

Waters also complained that the Act “completely guts and functionally terminates the highly successful Consumer Financial Protection Bureau, which has already returned nearly $12 billion to 29 million consumers ripped off by predatory financial institutions.”

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