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House Passes Dodd-Frank Reform Act

Phil Hall
Jun 08, 2017
A coalition of industry trade organizations is calling on the U.S. Senate to speed the confirmation of Seth Appleton's as the next Assistant Secretary for Policy Development and Research at the Department of Housing and Urban Development (HUD)

The U.S. House of Representatives voted to approve the Financial CHOICE Act (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs), legislation that is being promoted to overhaul and replace the Dodd-Frank Act.
“Every promise of Dodd-Frank has been broken,” said House Financial Services Committee Chairman Jeb Hensarling (R-TX), the bill's author, following the House vote. “Fortunately there is a better, smarter way. It’s called the Financial CHOICE Act. It stands for economic growth for all, but bank bailouts for none. We will end bank bailouts once and for all. We will replace bailouts with bankruptcy. We will replace economic stagnation with a growing, healthy economy.”
After clearing the House Financial Services Committee last month in a vote along party lines, the bill passed the full House by 233-186, with no Democrats supporting the measure. It would need to clear the Senate floor before reaching the desk of President Donald Trump.
The President Tweeted his satisfaction with the House vote, saying: "Congratulations to Jeb Hensarling & Republicans on successful House vote to repeal major parts of the 2010 Dodd-Frank financial law. GROWTH!" During his presidential campaign, Trump used an interview with Reuters in May 2016 to blame the 2010 legislation for having a deleterious impact on the financial services industry and the wider economy. Since coming to the White House, he kept up his criticism.
“We expect to be cutting a lot out of Dodd-Frank because frankly, I have so many people, friends of mine that had nice businesses, they can’t borrow money,” President Trump said after a White House meeting with executives from Wall Street. “They just can’t get any money because the banks just won’t let them borrow it because of the rules and regulations in Dodd-Frank.”
What Could Be Expected
The Congressional Budget Office (CBO) estimated the Financial CHOICE Act would reduce the deficit by $33.6 billion over 10 years and that the bill’s regulatory relief would benefit community banks and credit unions. However, the nation’s largest banks would be unlikely to raise enough capital to meet the bill’s requirement for substantial regulatory relief, the CBO added.
Speaker of the House Paul Ryan (R-WI) praised the concept of the Hensarling bill while claiming the Dodd-Frank Act was having an onerous effect on the economy. “Small businesses are struggling," he said. "They have been unable to hire, invest or get the loans they need to get off the ground. Families looking to keep their money safe are hit with fees they can’t afford. And why? Our community banks are in trouble. They are being crushed by the costly rules imposed on them by the Dodd-Frank Act. This law may have had good intentions, but its consequences have been dire for Main Street. Let me put it this way: It is more than a thousand pages long and has more rules and regulations than any other Obama-era law. The burdens created are real.”
According to Rep. Ryan, the CHOICE Act aims to:
►Rein in Dodd-Frank.
►Deliver relief to Main Street.
►End taxpayer bailouts.
►Cut the deficit by $24 billion.
►Rein in unchecked Washington bureaucrats.
Financial Industry Thumbs Up
Reaction to the bill's passage from financial service trade association leaders was swift and positive.
"NAMB applauds the passage of HR 10, The Financial CHOICE Act,  and looks forward to working with the Senate on further refinements that help the mortgage industry place consumers into homes," said Fred Kreger, president of NAMB—The Association of Mortgage Professionals.   
“The House has taken the lead in efforts to modernize the financial regulatory system to advance the goal of boosting the economy without sacrificing important consumer and taxpayer protections,” said Tim Pawlenty, CEO of the Financial Services Roundtable. “We look forward to working with Congress to get many of the provisions in the CHOICE Act to the President’s desk.”
“The passage of the Financial CHOICE Act is a critical win for Main Street Americans who rely on affordable, objective advice to achieve their financial goals,” said Dale Brown, president and CEO of the Financial Services Institute. “Under this legislation, independent financial services professionals will be able to protect their senior clients from exploitation without violating privacy laws in addition to several other significant reforms. These reforms are needed in order to ensure that investors are protected, and have access to affordable, objective advice that is in their best interest.”
Dan Berger, president and CEO of the National Association of Federally-Insured Credit Unions (NAFCU), also voiced praise. "NAFCU praises the passage of this important bill that, if enacted, would help provide the credit union industry with much-needed regulatory relief," said Berger. "We appreciate members of the House and bill author Chairman Jeb Hensarling for recognizing the current regulatory burden facing credit unions, and look forward to working with the Senate to enact meaningful relief for our members."
Independent Community Bankers of America (ICBA) President and CEO Camden R. Fine led the praise for Rep. Hensarling in securing the House’s approval.  “ICBA congratulates Chairman Hensarling on House passage of the Financial CHOICE Act, which advances ICBA-advocated community bank regulatory relief to enhance economic and job growth nationwide,” he said. “This ICBA-supported legislation includes many provisions in ICBA’s pro-growth Plan for Prosperity regulatory relief platform, such as common-sense reforms to burdensome and costly mortgage-lending requirements, relief from excessive and unnecessary call report and data-collection mandates, and greater accountability in the bank exam environment.”
“Today’s House vote is an important step toward making much-needed regulatory reforms that will allow banks to better serve their customers and communities,” said Rob Nichols, president and CEO of the American Bankers Association. “We applaud Chairman Hensarling and members of the House Financial Services Committee for their continuing efforts to fix financial rules that are holding back the U.S. economy, and doing little to enhance safety and soundness. We look forward to working with lawmakers in the House and Senate as this process moves forward.”
“We applaud the House of Representatives for passing the Financial CHOICE Act, and we appreciate Chairman Hensarling's leadership on this issue,” said Jim Nussle, president and CEO of the Credit Union National Association. “This bill represents a big win for credit unions and their members. And, as the debate moves to the Senate, we will continue to play offense to ensure Congress enacts common-sense legislation that improves the operating environment for credit unions to more fully serve their members.”
“We appreciate the House of Representatives’ effort to provide regulatory reform via the Financial CHOICE Act and thank House Financial Services Committee Chairman Jeb Hensarling for remaining committed to making relief a priority," said Consumer Bankers Association (CBA) President and CEO Richard Hunt. "We also appreciate the reforms the CHOICE Act made to section 1071 of the Dodd-Frank Act and to arbitration. CBA and its members, who represent the nation’s largest retail banks, still believe any reforms made to the CFPB should begin with the restructuring of the bureau’s leadership. In order to provide balance and stability to consumers and the economy, the CFPB should be led by a five-person bipartisan commission to ensure it is protected from potential political influence.”
Unhappy Democrats
The House vote was strictly a partisan split, with only one Republican in opposition. Not surprisingly, Democrats were immediately angry with the results of the vote.
Sen. Elizabeth Warren (D-MA) Tweeted, "I’m going to fight my heart out to protect Wall Street reform & the @CFPB. I urge the Senate: Enough with the Wall Street handouts."
California Rep. Maxine Waters, the ranking member of the House Financial Services Committee, called the legslation the "Wrong Choice Act" since it was introduced and continued that moniker after the vote. “We have come so far since the financial crisis–but the Republicans’ #WrongChoiceAct threatens to put Americans at risk once again,” Tweeted Rep. Waters.
Sen. Sherrod Brown (D-OH), the ranking member of the Senate Banking Committee, took to Twitter to complain the bill "is a massive giveaway to megabanks and payday lenders. It would undo the progress we've made." Last month, Sen. Brown claimed the bill would "help a rogue’s gallery of special interests​."
Rep. Keith Ellison (D-MI)  Tweeted that the bill "lets scammers skim from your wallet, bank account and retirement plan." And outside of Washington, New York State Comptroller Tom DiNapoli weighed in on Twitter, calling the bill "a bad choice" and adding, "It risks pushing American families to shady financial lenders and schemes." 
The Next Step?
After the House vote, the bill will now go to the Senate. But the fate of the bill is not clear. In an interview last month with Bloomberg News, Senate Majority Leader Mitch McConnell played down the chances that any changes to the Dodd-Frank Act would gain bipartisan support in that chamber.
“I’d love to do something about Dodd-Frank, particularly with regard to community banks, but that would require Democratic involvement,” said Sen. McConnell. “I’m not optimistic.”
Sen. McConnell added that he discussed potential changes to the 2010 legislation with Sen. Mike Crapo (R-ID), the chairman of the Senate Banking Committee, who stated that Democrats were not interested in doing any legislative rewrites. “So far, my impression is the Democrats on the banking committee believe that Dodd-Frank is something akin to the Ten Commandments,” Sen. McConnell added.

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