House passes Choice Act that would gut Dodd-Frank banking reforms

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House passes Choice Act that would gut Dodd-Frank banking reforms

•The bill would gut many of the key banking reforms implemented after the financial crisis.
•The measure, however, stands virtually no chance to pass the Senate.

Jeff Cox   | @JeffCoxCNBCcom
21 Hours Ago
CNBC.com


The House of Representatives pushed through a bill Thursday that would gut many of the key banking reforms implemented after the financial crisis.

In a primarily partisan vote, the House passed the Financial Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs Act, a highly controversial measure that stands virtually no chance to pass the Senate.

Among the most significant provisions are measures that allow banks to escape heightened regulatory requirements and cut stress tests back from their current annual schedule, while the bill also eviscerates the Consumer Financial Protection Bureau.

In all, the measure takes aim at the Dodd-Frank reforms, which sought less risk and higher capital levels from an industry linked to the crisis and the accompanying Great Recession. Lenders got in trouble after mass defaults of risky mortgages, then required a government bailout when they didn't have the capital to cover their losses.

"This is a jobs bill for Main Street. It will rein in the overreach of Dodd-Frank that has allowed the big banks to get bigger while small businesses have been unable to get the loans they need to succeed," said Speaker Paul Ryan in a statement Friday supporting the measure.

However, it has faced withering criticism from Democrats and some Republicans, and few provisions seem likely to survive the Senate.

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The Financial Choice Act Doesn't Repeal Dodd-Frank, but It's Still a Big Deal

The House approved the bill with a party line vote on Thursday, but it's prospects are dim in the Senate.

Eric Boehm|Jun. 8, 2017 6:31 pm

The number of regulations on American banks has doubled since 2010, which means plenty of work for regulators in Washington but less time (and money) for banks to do the things they are supposed to be doing.

The culprit behind those growing piles of financial regulations is the Dodd-Frank Act, passed by Congress in response to the banking collapse that led into the so-called Great Recession.

Congress on Thursday took a step towards reducing those piles of regulations, as the House voted straight down party-lines to approve the Financial CHOICE Act. Though the bill is expected to face significant opposition in the Senate, its passage is the surest sign yet that Republicans are serious about rolling back Obama era regulations that force banks to spend more time (and money) dealing with government imperatives.

"This law may have had good intentions," said Speaker of the House Paul Ryan on Thursday, referring to the Dodd-Frank Act, "but its consequences have been dire." Republicans said the reforms contained in the Financial CHOICE Act would rein-in regulations that have made it harder for small banks to operate, while providing a better mechanism for unwinding large banks that become unstable.

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http://reason.com/blog/2017/06/08/the-financial-choice-act-doesnt-repeal-d