By Joe Mont
A legislative package that aims to chisel away much of the Dodd-Frank Act will move on to a vote in the House of Representatives, following a party line vote by the House Financial Services Committee.
The Financial CHOICE Act, sponsored by the committee’s chairman, Rep. Jeb Hensarling (R-Texas) moved onward by a 34-26 vote on April 4. To become law, H.R. 10 must still receive a majority of votes in the House and, likely a more daunting task, the Senate.
Hensarling has described the Financial CHOICE Act as “a Republican alternative to the failed Dodd-Frank Act, which has contributed to the slowest economic recovery since World War II.”
The Financial CHOICE Act, he promised, will end taxpayer-funded bailouts of large financial institutions; impose tougher penalties on those who commit financial fraud and insider trading; demand greater accountability from Washington regulators, and relieve well-capitalized banks from growth-strangling regulations that slow the economy and harms consumers.
A few of the many changes up for Congressional consideration in the legislation include:
- Abolishing the Federal Reserve’s authority to supervise and set regulations for non-bank financial institutions.
- Renaming the Consumer Financial Protection Bureau as the Consumer Law Enforcement Agency, with a deputy director appointed by the president and removable at will.
- Directing the SEC to publish a manual establishing its enforcement policies and procedures.
- Eliminating the Volcker rule.
- Allowing banks and credit unions to qualify for regulatory relief if they maintain sufficient capital levels so as to not require a taxpayer bailout.
Throughout three days of markup hearings prior to the vote, Democrats on the committee were unsuccessful in their various efforts to add amendments to the bill. They did, however, manage to irritate their cohorts from across the aisle by demanding that the entire text of the nearly 600–page bill be read aloud by clerks, a task that took more than three hours.
Throughout the hearings there was plenty of angry rhetoric. Rep. Maxine Waters (R-Calif.) called the legislation “immoral” and “The ‘Wrong Choice Act.” Rep. Carolyn Maloney (D-N.Y.) called the bill a “middle finger to consumers, investors, regulators and markets.”
Rep. Brad Sherman (D-Calif.), however, said that some aspects of the bill could find favor among Democrats. Unfortunately, he said, Hensarling and Republicans have taken an all-or-nothing approach.
External reponses to the committee vote have been equally polarizing.
The pro-business Financial Services Roundtable called committee passage “an important first step to improving the regulatory system and promoting economic growth. “Improvements to financial regulations can lead to economic growth, while still protecting taxpayers and consumers,” said FSR CEO Tim Pawlenty. “We thank the Committee for its leadership in driving the regulatory reform debate forward and look forward to working with policymakers to craft a regulatory reform system that unlocks more economic opportunity for all Americans.”
Earlier this week, FSR also sent a letter to the Committee outlining its support for many provisions of the Act. Among them:
- The repeal of the government-imposed price controls related to the Dodd-Frank Act’s “Durbin Amendment,” which caps interchange fees for debit card transactions.
- De-designating non-bank SIFIs and remove FSOC’s power to make such classifications.
- Improvements to the Dodd-Frank Act’s enhanced prudential standards, favoring a regulatory system tailored to reflect the unique business operations, risk and capital profile of diverse financial services providers.
- Requiring more transparency and accountability from federal regulatory agencies.
- Allied Progress is a nationwide, progressive advocacy organization questioned the money behind the rulemaking. Republican members of the committee have received at least $32,211,535 from the financial industry, it said, citing data from the Center for Responsive Politics
“The Financial CHOICE Act is a deceptively named Wall Street giveaway that rewards the bankers and hedge fund managers who have showered Rep. Hensarling and other members of the House Financial Services Committee with tens of millions of dollars in campaign cash,” Karl Frisch, executive director of Allied Progress, said in a statement. “Wall Street is getting what they paid for and it is hard-working Americans who will be left holding the bag.”
The Financial CHOICE Act “is so extreme it even erases protections that predate the financial crisis, allowing Wall Street and predatory lenders to once again prey on consumers without repercussion,” he added.