House Financial Services Committee Chairman Jeb Hensarling, R-Texas. (Photo: AP)

After nearly four hours of debate on Thursday, the House passed the Financial Choice Act, legislation designed to replace the Dodd-Frank Act, derail the Department of Labor’s fiduciary rule and gut the Consumer Financial Protection Bureau.  

Democrats, who consistently referred to the legislation as the Wrong Choice Act during the heated debate on the House floor, offered no amendments to the bill, which passed by a 233-186 vote.

“Every promise of Dodd-Frank has been broken,” said House Financial Services Committee Chairman Jeb Hensarling, R-Texas, after the vote, referring to letters he’s received from Americans who were declined home, automobile and small business loans due to “Dodd-Frank’s burdensome regulations.” 

Earlier in the day Republicans introduced separate legislation to overturn Labor’s fiduciary rule.

The Choice Act, he said, “stands for economic growth for all, but bank bailouts for none. We will end bank bailouts once and for all. We will replace bailouts with bankruptcy. We will replace economic stagnation with a growing, healthy economy,” Hensarling said.

(Related: Fiduciary Rule Readiness Check: June 9th Effective Date)

Rep. Ann Wagner, R-Mo., who wrote the provision of the Choice Act that repeals Labor’s fiduciary rule, said that the Choice Act also “repeals thousands of burdensome regulations that made it harder for families to qualify for a mortgage, obtain an auto loan, and access other forms of credit that they depend on every day.”

House Democrats noted during the floor debate that the Choice Act is likely dead on arrival in the Senate.

Rep. Maxine Waters, D-Calif., ranking minority member on the House Financial Services Committee, said in her floor remarks that the Choice Act “is one of the worst bills I have seen in my time in Congress.”

The bill, she said, “is a vehicle for Donald Trump’s agenda to deregulate and help out Wall Street. It destroys nearly all of the important policies we put in place in the Dodd-Frank Wall Street Reform and Consumer Protection Act to prevent another financial crisis and protect consumers. This bill would create vast harm, and lead us right back to the bad old days.”

The Investment Company Institute, however, urged the Senate in a statement after the vote to support “important reforms” in the Choice Act, such as removing the power of the Financial Stability Oversight Council to designate nonbank entities as systemically important financial institutions.

“Left unaddressed, this flawed process could designate registered funds as SIFIs and subject them to regulation by the Federal Reserve—even though regulated stock and bond funds have never caused risks that threaten the US financial system or the broader economy, and the structure, regulation, and operation of these funds make such risks remote,” ICI said.

The designation “would introduce a wholly inappropriate and unnecessary regime of bank-type regulations that would increase costs and reduce returns for investors, distort the fund marketplace, and compromise the important role that funds play as a source of financing and capital formation in the economy.”

Other provisions “correct the indiscriminate application of bank-oriented stress-testing requirements to all large ‘financial companies,’” ICI added. “These changes would further reduce the risk of applying ill-suited measures to registered funds and fund advisors that would increase costs to fund investors without providing any corresponding benefits.”

Dale Brown, president and CEO of the Financial Services Institute, applauded passage of the bill, stating that it incorporates “several important regulatory relief measures to preserve access to and choice among financial advisors, products and services while reducing the impact of regulation on advisors’ ability to serve their clients.”

He said the bill “rolls back regulations, institutes rigorous cost/benefit analysis requirements and requires review of existing regulations,” while also incorporating the Senior$afe Act, “which allows firms and financial advisors to protect elderly clients from financial exploitation without inadvertently violating privacy laws.”

FSI, he said, is now “working on the Senate side to get a final bill to the president to sign.”

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