Committee advances bill to replace Dodd-Frank with regulatory system that holds Wall Street accountable

Legislation to roll back the Dodd-Frank Wall Street Reform Act and replace it with a regulatory system that holds Wall Street accountable and ensures equal opportunity for smaller financial institutions cleared a key House Financial Services Committee vote on Thursday.

The Financial CHOICE Act, H.R. 10, which was introduced by U.S. Rep. Jeb Hensarling (R-TX), the chairman of the House Financial Services Committee, was approved after nearly 28 hours of markup with support from U.S. Reps. Sean Duffy (R-WI), Bill Huizenga (R-MI) and French Hill (R-AR).

Among the key changes, the Financial CHOICE Act would allow banks to opt out of Dodd-Frank upon holding enough cash and would limit federal stress tests of major banks to every two years. It also removes the power of the government to label a bank “too big to fail,” and replaces Dodd-Frank’s Orderly Liquidation Authority with a bankruptcy process. In addition, it would repeal the Durbin Amendment, also known as the swipe fee reform, which put a cap on charges stores pay banks when a customer uses a debit card.

H.R. 10 would replace the Consumer Financial Protection Bureau (CFPB) with the Consumer Law Enforcement Agency. The new agency, which would oversee consumer protection and marketplace competition, would be subjected to the congressional appropriations process and additional oversight.

Duffy, the chairman of the House Financial Services Subcommittee on Housing and Insurance, said millions of Americans are still suffering from former President Barack Obama’s economic policies and “the disastrous Dodd-Frank Act.”

“Since it was shoved through Congress, bank fees have gone up, free checking is all but gone and small community banks have been choked out of existence,” Duffy said. “The Financial CHOICE Act is an off-ramp from Dodd-Frank’s rules and regulations, will help restore our small community banks and credit unions to their important role in our communities, and will jumpstart economic growth.”

Duffy said he was pleased that H.R. 10 contains a number of his proposals, like prohibiting CFPB from soliciting information on non-public personal information without consent, curbing CFPB’s use of taxpayer dollars, and changing how the Securities and Exchange Commission (SEC) registers proxy advisory firms that “prohibit unfair, coercive and deceptive practices.”

Huizenga, the chairman of the House Financial Services Subcommittee on Capital Markets, Securities and Investment, said Dodd-Frank has made it more difficult for hardworking Americans to secure a future over the last six years.

“The Financial CHOICE Act enacts pro-growth reforms that allow community banks and credit unions to better serve their customers and facilitate small business job creation, restores accountability to both Wall Street and Washington, and protects taxpayers from future taxpayer-funded bailouts by ending ‘too big to fail’ once and for all,” Huizenga said.

Additionally, the Financial CHOICE Act would improve accountability and transparency at the Federal Reserve. “These important reforms include an audit of the Fed so policymakers and everyday Americans have a more informed understanding of how the Fed is impacting our economy,” Huizenga said.

The Labor Department’s fiduciary rule would also be repealed under the Financial CHOICE Act to enhance consumer access to affordable retirement planning and investments.

“Families, entrepreneurs and small businesses have been hurt by the results of the over 44,000 pages of complex regulations from the Obama-era Dodd-Frank Act,” said Hill, who serves on the Financial Services Committee.

The committee’s approval of the bill is a step toward ending the one-size-fits-all regulatory approach of Dodd-Frank that hurt community banks and credit unions, Hill said. “These relationship-driven, locally focused banks historically have played a primary role in providing loans and access to capital to many consumers and small businesses,” he noted.