Another priority of the Trump administration is taking shape as the bill
to replace Dodd-Frank passed the House Financial Services Committee on
Thursday by a 34-26 vote. Three days of amendments and boisterous debate
preceded the vote, with Democrats voicing strong opposition to the bill.
The Financial CHOICE Act of 2017 (FCA) has been billed as the law to kill
Dodd-Frank. As of now, the bill is not in a position to completely replace
the complex consumer protection law passed by Congress in 2010, but it
will make significant changes to many of its current and proposed regulatory rules.
Most importantly, the bill kills the Department of Labor’s (DOL)
version of the Fiduciary Rule, which now paves the way for the SEC to
pass and implement its industry standard. The DOL would be prohibited
from promulgating a new fiduciary rule until 60 days after the SEC issues
its rule. The FCA also aims to roll back much of the regulatory oversight
rules put in place under Dodd-Frank, effectively gutting the legislation
to a point where it is no longer relevant.
Chairman of the Financial Services Committee, Jeb Hensarling (R-Texas)
said after passage that the Financial Creating Hope and Opportunity for
American Investors, Consumers and Entrepreneurs Act continues to protect
taxpayers by ending the era of bank bailouts, forcing failing financial
institutions to restructure under bankruptcy laws.
He added, Banks that qualify “for much-needed regulatory relief will
be so well-capitalized that they pose no threat to taxpayers or the economy.
Our plan replaces Dodd-Frank’s growth-strangling regulations on
small banks and credit unions with reforms that expand access to capital
so small businesses on Main Street can grow and create jobs.”
Financial industry insiders have praised the legislation for removing Dodd-Frank
regulations that they say as overly burdensome and hindering economic
growth. Paul Schott Stevens, President and CEO of Investment Company Institute,
approved of the bill moving forward saying its passage will create “wide-reaching
reforms” and fix the “flawed aspects” of Dodd-Frank.
Other contentious changes coming with FCA 2.0 is the repeal of the so-called
Vlocker Rule, and removal of the Financial Stability Oversight Council,
established to designate firms as systematically important financial institutions.
The new law will also change the name of the Consumer Financial Protection
Agency to the Consumer Law Enforcement Agency, makes it an agency of the
Executive Branch, and provides for its single-director presidential appointee
to be removable at will by the President.
The bill will now head to the full House for a vote, where Republicans
hold a substantial majority.
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