After three days of raucous debate in early May, the Financial Choice of 2017, the Republican bill to replace Dodd-Frank, passed the House Financial Services Committee by a 34-26 vote.
Heated debate ensued over the three-day markup, with Democrats vehemently opposing provisions of the bill that gut the Consumer Financial Protection Bureau, kill the Volcker rule, and repeal the Labor Department’s fiduciary rule so that the Securities and Exchange Commission can move first on a fiduciary rule.
The Financial Choice Act 2.0 now moves to the full House, but doubts persists as to whether there’s appetite in Congress to deal with Dodd-Frank reform.
Senate Majority Leader Mitch McConnell said in mid-May that he’s pessimistic Congress will make major changes to the Dodd-Frank Act because he doubts Republicans can secure enough Democratic votes to pass legislation.
But Senate Banking Committee Chairman Mike Crapo, R-Idaho, said Wednesday during a speech at the Financial Industry Regulatory Authority’s annual meeting in Washington that his goal is to secure bipartisan support for House Financial Services Committee Chairman Jeb Hensarling’s CHOICE Act.
“My goal this Congress is to work in a bipartisan manner with members of the Banking Committee, the administration, Chairman Hensarling and the regulators to strike a balance between smart, thoughtful regulation and promoting economic growth,” Crapo said.
A just-released score by the Congressional Budget Office may buoy the Act's chances of passage. The non-partisan, independent CBO reports that the Financial CHOICE Act (H.R. 10) will slash the federal budget deficit by $24.1 billion over the next 10 years.
CBO also estimates that community banks and credit unions will be the "overwhelming beneficiaries" of the Financial CHOICE Act as few, if any, of the nation’s biggest banks will meet the bill’s capital requirements to qualify for the greatest regulatory relief.
“The Financial CHOICE Act ends bank bailouts forever, holds Wall Street and Washington accountable, unleashes America’s economic potential and reduces the deficit by billions,” Hensarling said in a Friday statement. “The Financial CHOICE Act is not what Wall Street wants, but it is what Main Street and hardworking taxpayers need. Wall Street CEOs and Democrats are the ones saying ‘don’t repeal Dodd-Frank.’ They know Dodd-Frank gives big banks a competitive advantage, and the big banks have gotten even bigger since Dodd-Frank became law. The Financial CHOICE Act will help struggling community banks and credit unions, as the CBO affirms.”
The revamped version of the bill, dubbed Financial Choice Act 2.0, still says that if the Labor Department promulgates a fiduciary rule, “it must be substantially similar” to one issued by the Securities and Exchange Commission.
Hensarling yields wide power as leader of the committee that oversees the banking industry, the Fed and the SEC.
He’s been a vocal opponent of the Consumer Financial Protection Bureau as well as Labor’s fiduciary rule.
Sen. Elizabeth Warren, D-Mass., lambasted the Financial Choice Act in her April 28 testimony before democratic members of the committee, stating that the bill to undo Dodd-Frank is not only “wrong” but “immoral” as it would allow big banks, financial advisors and payday lenders “to go back to cheating people.”
In testimony before Democratic members of the House Financial Services Committee, who called for the hearing, Warren said: “Let me be blunt, [the act is a] 586-page insult to working families.”
The Financial Choice Act, which would also dismantle the Consumer Financial Protection Bureau that Warren helped set up, is “the wrong choice,” Warren stated. “It is immoral” and “about throwing people under the bus so that lobbyists can do the bidding of Wall Street.”
Added Warren: “We built the Consumer Financial Protection Bureau and the rest of Dodd-Frank so families wouldn’t get cheated.”
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.”
But Hensarling has said that the CFPB, while having an “important mission,” is the “most powerful and least accountable Washington bureaucracy in history and a perfect example of the political left’s dangerous belief that the ends always justify the means.”
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