GOP moves closer to long-sought goal of Dodd-Frank overhaul

Owen Stevens
May 6, 2017

WASHINGTON (AP) - House Republicans on Wednesday blocked Democratic efforts to preserve the independence of a consumer watchdog created after the 2008 economic meltdown as the GOP pressed ahead with an overhaul of the nation's financial regulatory law.

The House Financial Services Committee voted 34 to 26 along party lines, passing the Financial Choice Act, a Republican bill to undo the 2010 financial reform law.

The bill-the Financial Choice Act-will get its final cuts as it passes through the House Financial Services Committee after almost a year of unveiling the first draft.

"It's an invitation for another Great Recession or worse", Maxine Waters, the top Democrat on the panel, said during this week's markup of the bill.

Democrats signaled a willingness to work on a bipartisan basis on a community bank relief bill, but asked Hensarling to break up his sweeping legislation to focus on smaller-sized institutions.

The Center for Responsible Lending stands in stark opposition to the previous comments and believes the act is an extreme bill that would shred essential consumer protections enacted in the wake of the financial crisis through Dodd-Frank. While Republicans in Congress craft a bill to unwind the tighter financial rules that took effect after the 2008 crisis, President Donald Trump is looking in another, seemingly opposite direction: He's entertaining the idea of restoring the Depression-era firewall between commercial banking and its riskier investment side.

Republicans argued that they want to enhance the accountability of the bureau.

The House Financial Services Committee's ranking member Rep. Maxine Waters D-Calif. left with committee Chairman Jeb Hensarling R-Texas speaks on Capitol Hill in Washington Tuesday

Sen. Elizabeth Warren, D-Mass., called the bill "a 589-page insult to working families".

"We'll need our leagues, credit unions, members and other stakeholders to remain on the advocacy offensive to keep this momentum going to ensure that is not more hard to obtain safe and affordable products from credit unions", CUNA President and CEO Jim Nussle said. "Wall Street banks have been some of the biggest beneficiaries of Dodd-Frank regulation".

Still, getting the new bill to Trump's desk could be a hard road.

While the path to approval in the House could be achievable with the current Republican majority, a 60-vote approval will require some Democratic support in the Senate, which could prove significantly more hard.

In a fast-moving session following two days of laborious debate, the panel flew through a series of votes on amendments, as the majority Republicans easily beat back Democrats' attempts to reshape and soften the legislation. The CHOICE Act-the repeal of Dodd-Frank planned for a vote in the House-contains a provision that overturns the fiduciary rule. In addition, it would also allow banks maintaining a 10 percent non-risk weighted leverage ratio to elect into an alternative regulatory regime that would, among other things, exempt qualifying institutions from federal capital and liquidity requirements, blocks on capital distributions, systemic risk regulations and limitations on mergers and acquisitions provided that any new entity also maintains the minimum leverage ratio.

They said Hensarling's bill would gut consumer protection and allow banks to make the kind of risky investments that required taxpayers to come to their rescue almost a decade ago. "It's important that we get tax reform done". This final version of the CHOICE Act also contains substantial changes to the SEC's mandate. Republican support for Act looks strong, so it appears likely to make it through.

Such agreement was nonexistent during the House hearings this week.

Other reports by VgToday

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