Rep. Jeb Hensarling
It’s called the Financial Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs Act. Since that’s a mouthful, the bill’s sponsor and House Financial Services Committee Chairman and Texas Republican Rep. Jeb Hensarling just calls it the CHOICE Act.
The House passed the CHOICE Act last week along party lines at 233 yes to 186 no.
Hensarling said it — among other things — it replaces or restricts the Dodd-Frank Act that he contends is crushing the financial and business sector with needless and overbearing rules. “Dodd-Frank represents the greatest imposition on our business enterprises than all Obama-era regulations combined. In many respects, it was not a response to the financial crisis, but a grab bag of leftist ideas that were waiting on the shelf for quite some time,” he said.
The bill does these things and more:
• The bill allows the nation’s 6,000 banks out from under Dodd-Frank regs if they can reach certain cash thresholds
• It reduces the frequency of federal stress tests for banks
• It rolls back the oversight powers of some federal agencies — powers Dodd-Frank expanded
• It does away with the liquidation authority of the federal government in which it can take over a bank — or other large firm — before it collapses and dismantle the company — translation: banks will go through normal bankruptcy procedures
• It turns the Consumer Financial Protection Bureau (CFPB) into a law enforcement agency
Critics say the bill let’s big banking off the hook and out from under regulations. But Hensarling’s bill just ups the ante. For example:
• For JPMorgan Chase to get out from under Dodd-Frank regulations it would have to add an additional $107 billion to its reserves
• Goldman Sachs would need $45 billion
• Bank of America would need $82 billion
After it passed, House Speaker Paul Ryan and other Republican leaders raved about Hensarling’s bill. “This legislation comes to the rescue of Main Street America. The Financial CHOICE Act makes it possible for small businesses across this country to stop struggling and to start hiring,” Ryan said.
Democrats disagree — as expected — and California Democrat Rep. Maxine Waters said, “It's shameful that Republicans have voted to do the bidding of Wall Street at the expense of Main Street and our economy. They are setting the stage for Wall Street to run amok and cause another financial crisis. I urge my colleagues in the Senate not to move on this deeply harmful bill.”
House Minority Leader Nancy Pelosi agreed and calls the CHOICE Act a “dangerous Wall Street-first bill that would drag us back to the days of the Great Recession.”
No one is sure exactly what will happen in the Senate but it’s not likely to go far since Democrats can filibuster. The Republican leadership on the Senate Banking Committee have floated a compromise to fix the struggles Dodd-Frank have forced upon smaller banks.
There is some bipartisan support for that change.
Sen. Mike Crapo of Idaho is the chairman of that committee and he’s wanting to work with Democrats to develop a bipartisan solution to the problems caused by Dodd-Frank. In a statement, Crapo said, “The CHOICE Act makes a positive move away from government micromanagement, and returns to basic principles of safety and soundness and market-driven principles.”
President Trump wants changes and more deregulation. His administration is looking at ways to reinterpret how Dodd-Frank’s rules are implemented.
Republican President Donald Trump is pushing for deregulation across the federal government. The CHOICE Act has his support. Next week the Treasury Department is expected to release the first in a series of reports on how to lighten the financial rules of Dodd-Frank and on how to re-interpret Dodd-Frank’s provisions.
BTW, the Congressional Budget Office — which is non-partisan — says the changes implemented by the CHOICE Act will save the federal government $24 billion in the next decade. Most of it from deleting its authority to unwind failing financial institutions.
Source links: The Hill, Insurance Journal, The Washington Post