WASHINGTON, D.C. — On Tuesday, the House Financial Services Committee approved a bill described by supporters as an alternative to the Dodd-Frank Act. Critics, however, call the bill an “anthology of the committee’s efforts over the past six years” to defang the Consumer Financial Protection Bureau (CFPB) and deregulate the financial services industry.
House bill 5983, also known as the Financial CHOICE Act of 2016, was introduced on Sept. 9 by Rep. Jeb Hensarling (R-Texas), one of the CFPB’s harshest critics, and was passed by the committee he chairs on Sept. 13 by a 30-26 vote. The legislation contains language found in 73 other bills introduced during the 114th Congress, including two bills, S. 2663 and H.R. 1737, that aim to repeal the CFPB’s March 2013 guidance on dealer participation.
“Simply put, the Dodd-Frank Act has hurt the economy, hurt consumers, codified bank bailouts, and made our financial system less stable,” said Hensarling during a recent hearing on his proposed legislation. “It’s time for a new paradigm in banking and capital markets. It’s time to offer all Americans opportunities to raise their standards of living and achieve financial independence. In a phrase, we need economic growth for all and bank bailouts for none.
“There’s a better way forward, and it’s called the Financial CHOICE Act,” he added. “It’s an acronym for creating hope and opportunity for investors, consumers and entrepreneurs.”
According to a press release posted on the House Financial Committee’s website, the legislation would end taxpayer-funded bailouts for large financial institutions; relieves banks that elect to be strongly capitalized from regulations; imposes tougher penalties on those who commit financial fraud; and demands greater accountability from Washington Regulators.
And aside from the CFPB’s guidance and dealer markups, the bill would repeal the Durbin Amendment, which called on the Federal Reserve to limit fees charged to retailers for debit card processing when it was passed as part of the Dodd-Frank Act in 2010. It would also repeal the “living will” requirement under Dodd-Frank, which mandates that bank holding companies with assets of $50 million or more to submit plans to the Federal Reserve and the Federal Deposit Insurance Corp. that describe their strategy in the event of “material financial distress or failure of the company.”
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