House Approves Dodd-Frank Act Reform Bill
Tue 20 Jun, 2017 / by McIntyre & Lemon / Client Alerts
06/20/17 – On June 8th, the U.S. House of Representatives passed the Financial CHOICE Act (CHOICE Act), a Republican bill to reform the Dodd-Frank Act.
The CHOICE Act, sponsored by Congressman Jeb Hensarling (R-TX), would substantially roll back the financial regulations mandated by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). “CHOICE” is an acronym short for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs.
In May, the House Financial Services Committee approved the CHOICE Act by a party line vote of 34-26. After clearing the committee, the bill passed in the House by a vote of 233-186, also obtaining only Republican votes. The bill still needs to clear the Senate before reaching President Donald Trump’s desk for final approval.
Over the past couple of months, the Republican controlled House has taken action in response to the previous administration’s financial regulations, particularly focusing on the shrinking of the Dodd-Frank Act’s mandates and curtailing the Consumer Financial Protection Bureau (CFPB). Title VII of the CHOICE Act, would, among other things, strip the CFPB of much of the authority it currently has under Title X of the Dodd-Frank Act.
The bill would also limit the extra regulatory oversight the Dodd-Frank Act granted to the Federal Reserve, restructure the CFPB, and broadly repeal a vast array of regulations imposed on financial institutions, particularly banking. The CHOICE Act would exempt larger banks from most of the Dodd-Frank Act’s rules as long as they maintained the required level of equity; as a result banks would be subjected to fewer stress tests. Another change includes the repeal of the Volcker Rule, which restricts banks ability to make speculative investments.
A brief overview of some of the proposed changes to Dodd-Frank:
- Section 711 of the CHOICE Act would rename the CFPB the Consumer Law Enforcement Agency (CLEA), and allow the President to remove the CFPB Director without cause.
- Section 713 would bring CLEA into the Congressional appropriation process and allow Congress to control its budget.
- Section 715 would grant a party who is the subject of an administrative action by the CLEA to terminate the action and force the CLEA to bring the action into court.
- Section 716 would grant the recipient of a CLEA civil investigative demand (CID) the right to file a petition in federal court to modify or set aside the CID.
- Section 717 would require CLEA to conduct a cost benefit analysis for CLEA regulations, administrative actions, and civil actions.
- Section 718 would make it clear that courts are not required to defer to CLEA interpretations of the laws it administers.
- Section 720 would require CLEA to establish a procedure for responding to requests for advisory opinions.
- Section 727 would eliminate CLEA’s examination and supervisory authority.
- Section 729 would strip CLEA of any rulemaking, enforcement, or other authority relating to employee benefit compensation plans or persons regulated by the CFTC or the SEC.
- Section 733 would strip CLEA’s rulemaking, enforcement ,or other authority over payday loans, vehicle title loans, and other similar loans.
- Section 734 would nullify the CFPB’s March 2013 auto lending guidance.
- Section 736 would strip CLEA of any UDAAP authority.
- Section 738 would repeal CLEA’s authority to restrict arbitration.
The CHOICE Act still needs to pass the Senate, where the Republicans hold a much slimmer margin. As such, significant compromise or cut backs to the House’s version of the bill will likely be needed if it is to reach the President’s desk.
World News; CNBC.