WASHINGTON, June 9, 2017 – There were cheers and jeers as the House of Representatives voted on a replacement to the Dodd-Frank financial industry legislation, passed early in the first administration of Barack Obama. The House of Representatives passed the Financial Choice Act by a vote of 223-186 in a near party line vote.
The bill was the brainchild of Jeb Hensarling, the Republican from Texas who is the Chair of the Financial Services Committee, who stated
“We will make sure there is needed regulatory relief for our small banks and credit unions, because it’s our small banks and credit unions that lend to our small businesses that are the jobs engine of our economy and make sure the American dream is not a pipe dream.”
The bill would roll back much of Dodd-Frank, passed in 2010, including the controversial Volcker rule, which forbids proprietary trading by banks. It would also reduce the scope and authority of the Consumer Financial Protection Bureau, the newly formed agency created under Dodd-Frank which aims to protect consumers from financial scams.
Under Dodd-Frank, the appointed head of the Bureau cannot be removed by either Congress or the President, a provision widely-regarded as unconstitutional although it has yet to be tested in court. Republicans have criticized the agency for overreach and for doing functions of other agencies.
“We are not seeking to roll back all of the policy response, all of Dodd-Frank,” said Rob Nichols, president and CEO of the American Bankers Association. “That’s not our intention. Our intention is to acknowledge what many regulators and legislators will tell you both publicly and privately, which is aspects of Dodd-Frank overshot.”
But not everyone was happy with the vote. California Congresswoman Maxine Waters, the ranking Democratic member of the Financial Services Committee, has taken to calling the bill the “wrong choice act” in derisive manner.
“This bill would pave the way back to economic damage of the same scale (as the financial crisis), or worse,” Waters said in a statement.
The bill now heads to the US Senate where it faces a more uncertain future.
Any financial reform will start in the Senate Banking Committee, chaired by Republican Senator Mike Crapo of Idaho. Crapo said last month any reform will be done in a bi-partisan manner:
“We will have a strong grounding from which to build a common-sense financial regulation reform process in America.” My goal this Congress is to work in a bipartisan manner with members of the Senate Banking Committee, the administration, with [House Financial Services Committee] Chairman [Jeb] Hensarling [R-TX] and with the regulators to strike a smart balance with thoughtful regulation that promotes economic growth.”