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Rep. Hensarling Shares Draft of Bill to Replace Dodd-Frank

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House Financial Services Committee Chairman Jeb Hensarling, R-Texas, has released a discussion draft of the Financial CHOICE Act, his plan to replace the Dodd-Frank Act and “promote economic growth.” 

Speaking at the Washington-based Heritage Foundation on Thursday, Hensarling said his goal is to have the Financial Choice Act marked up sometime in September. CHOICE stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs.

“We want the American people to see our proposal, because it will result in economic growth for all and bank bailouts for none,” Hensarling said. “Dodd-Frank has failed. It has contributed to the slowest, smallest, weakest and worst economic recovery of our lifetimes. We must instead offer all Americans greater opportunities to raise their standards of living and achieve financial independence by replacing Dodd-Frank with real reforms that work.”

The Committee also publicly issued a description of each section of the proposal and how its reforms will work.

Hensarling’s changes include retroactively repealing the Financial Stability Oversight Council’s (FSOC) authority to designate firms as systemically important financial institutions (SIFI) and giving the Consumer Financial Protection Agency a new name— the “Consumer Financial Opportunity Commission (CFOC).”

The new CFOC should have a dual mission of consumer protection and competitive markets, with a cost-benefit analysis of rules performed by an Office of Economic Analysis, he says. The Act also would replace the current CFPB’s single director with a bipartisan, five-member commission subject to congressional oversight and appropriations.

Additional reforms in the Act include repealing sections and titles of Dodd-Frank that limit capital formation, such as the Volcker Rule, and getting rid of the SEC’s authority to “both prospectively and, possibly, retroactively eliminate or restrict securities arbitration.”

Americans for Financial Reform balked at the Act, explaining in a statement on Thursday that the legislation “contains so many unprecedented gifts to the financial industry that it would make financial regulation even weaker than it was before the crisis.”

For example, AFR says that “although the plan would increase the maximum penalty the SEC can levy for administrative violations, it also contains a half a dozen provisions that would undermine the SEC’s ability to successfully mount such a case. So even though penalties could be higher if a case succeeded, the bill would make success even rarer than it already is.”


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