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.
