WASHINGTON – House Financial Services Committee Chairman Jeb Hensarling will likely reintroduce a Dodd-Frank overhaul bill by the end of the month.
The Financial Choice Act has been the House GOP's flagship financial reform bill and passed out of committee in the last Congress, but Hensarling has said he would introduce a 2.0 version this year.
“Our plan, which will be released in the next few weeks, is a bold and visionary plan that protects consumers by holding Wall Street and Washington accountable, ends bailouts and unleashes America’s economic potential,” Sarah Rozier, the committee's communications director, said Tuesday.
President Trump earlier in the day had reiterated calls to roll back the financial reform law.
“We’re doing
While Choice 2.0 has been closely vetted and got a boost from Trump’s strong comments, it faces an uncertain path in the Senate where it lacks Democratic support.
The updated Choice Act will include notable changes, including significant changes to the Consumer Financial Protection Bureau, including changing its name to the Consumer Financial Opportunity Agency and making the director — currently Richard Cordray — and the No. 2 official removable at the will of the president. The original version of the bill would have made the CFPB a bipartisan commission.
Other changes to the CFPB include taking away its supervisory functions and Unfair, Deceptive or Abusive Acts and Practices authority and making it strictly an enforcement authority. It would do away with the publishing of its consumer complaint database, too.
The Federal Housing Finance Agency director would be removable at the will of the president in Choice 2.0 instead of making the agency a bipartisan commission. Unlike the version of the Choice Act that was introduced in the last Congress, the Office of the Comptroller of the Currency and the National Credit Union Administration structure would remain intact.
Regulators would also have a harder time promulgating rules that have a significant economic impact; financial agencies that are writing rules that would have an effect of more than $100 million a year would have to provide an evaluation of the least costly or burdensome process for implementation and take state, local and private-sector input.
Dodd-Frank 'off-ramp'
Choice 2.0 would also call for a lower hurdle for banks to qualify for a Dodd-Frank “off-ramp” that exempts them from Basel III capital and liquidity requirements as well as restrictions on mergers and acquisitions.
It would require banks to have at least a 10% Tier 1 capital ratio to qualify for the off-ramp, compared with the original bill that specified banks would need a 10% leverage ratio and a CAMELS score of 1 or 2.
The bill would also allow banks that meet the capital requirement to be exempt from Federal Reserve Board stress tests.
For larger banks, the bill takes aim at other stress-testing measures including the Comprehensive Capital Analysis and Review going to a two-year cycle and requiring only an annual company-run Dodd-Frank stress test. All banks would also be exempt from the qualitative portion of the CCAR.
“Chairman Hensarling looks forward to working with the President and his administration to eliminate Dodd-Frank and replace it with the Financial CHOICE Act,” Rozier said.
