On May 4, 2017, the U.S. House of Representatives Financial Services Committee passed the Financial CHOICE Act, H.R. 10, with a 34-to-26 vote down party lines. The legislation, co-sponsored by Chairman Jeb Hensarling (R-TX), seeks to overhaul the 2010 Dodd-Frank Act, including restructuring the Consumer Financial Protection Bureau (CFPB). LenderLaw Watch previously reported on the Financial CHOICE Act here, and Goodwin summarized the development in its May 10, 2017 Financial Services Weekly News Roundup.
Significant proposals include:
- Renaming the CFPB the “Consumer Law Enforcement Agency” (CLEA) and assigning it with a dual mission of consumer protection and competitive markets;
- Restructuring the CLEA as an agency within the Executive Branch with a single director removable at will by the President;
- Subjecting the agency to Congressional oversight and the appropriations process;
- Eliminating the agency’s supervisory function and ability to enforce unfair, deceptive or abusive acts or practices (UDAAP);
- Repealing the Department of Labor’s fiduciary rule (which expands the definition of “investment advice fiduciary” under the Employee Retirement Income Security Act of 1974);
- Repealing the Volker rule (which prohibits banks from engaging in proprietary trading);
- Repealing the Durbin amendment (which restricts interchange bank fees);
- Repealing the Financial Stability Oversight Council’s designation authority;
- Establishing an independent, Senate-confirmed Inspector General;
- Eliminating the Office of Financial Research; and
- Providing regulatory relief for community banks.
The legislation was initially introduced in 2016, with an updated version released on April 19, 2017. The party-line vote was to be expected in light of the contentious and polemic weeks leading up to it. Republicans tout the bill as necessary to holding Wall Street accountable while avoiding undue regulatory burden, while Democrats dub the bill the “Wrong Choice Act.”
Chairman Hensarling initially scheduled only one hearing, for April 26, 2017, to debate the bill. This prompted Committee Democrats, led by Representative Maxine Waters (D-CA), to delay the bill’s scheduled mark up and to send a letter to the Chairman. She denounced the decision to provide minimal debate for the bill, stating, “Given the scope and extent of the proposed legislative changes in the discussion draft, ranging from capital markets, banking, consumer protection, investor protection, financial stability, insurance, and monetary policy, it is critical that multiple hearings be convened to allow diverse and comprehensive testimony on these topics before the Committee marks up the measure.” The Congresswoman continued, “[W]hile Democrats may not always agree with your policy proposals, we should all agree that the American public deserves nothing less than full transparency, accountability, and debate of the matters before this Committee.” The Democrats then scheduled a “Minority Day Hearing” for April 28, 2017 to debate the bill and question witnesses including Senator Elizabeth Warren (D-MA). In protest, possibly of the Democrats’ having caused delay, no Republicans attended the April 28 hearing.
The Act will now head to the full U.S. House of Representatives, where there is likely to be a vote in the near term. Even if the bill passes the House, proponents are likely to face an uphill battle in the Senate, where eight Democrats would have to vote in favor of the bill to obtain the 60 votes that are expected to be needed in order for the bill to pass.
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