The U.S. House voted June 8 to approve a bill to roll back many of the Dodd-Frank financial regulations adopted during the Obama administration. The bill now moves to the Senate where it is likely to face stiff Democratic opposition.
The House plan called the Financial CHOICE Act was approved along party lines with mostly Republican support. It has generally received praised from the financial services industry, and criticism by many consumer groups.
Most observers agree the House bill is unlikely to survive in its current form, but it could be a first step toward repealing many of the banking regulations enacted following the 2008 financial crisis.
The House bill, crafted by House Financial Services Committee Chairman Jeb Hensarling, would repeal or amend many of the Dodd-Frank financial regulations, including repealing the Volcker rule, which restricts certain speculative investments by banks. It would change some of the regulations related to systematically important, or “too big to fail,” banks. The bill also would limit the authority of Consumer Financial Protection Bureau in regulating financial institutions, among other changes.
In a June 8 statement released following the passage of the bill, Rob Nichols, president and CEO of the American Bankers Association, called the House bill an “important step toward making much-need regulatory reforms that will allow banks to better serve their customers and communities.”
“While the Financial CHOICE Act contains a number of reforms ABA members have long supported, it would have been much stronger had a provision to repeal the Durbin amendment been retained in the bill,” Nichols added in the statement.
Independent Community Bankers of America President and CEO Camden R. Fine said in a news release the Financial CHOICE Act “advances ICBA-advocated community bank regulatory relief to enhance economic and job growth nationwide.”
“Meaningful regulatory relief for the nation’s community banks is needed to improve lending and strengthen economic growth at the local level,” Fine said in the release. “While ICBA continues to have concerns with provisions of the bill that would alter the 10% concentration cap on deposits and liabilities at the nation’s largest financial institutions, we look forward to continuing to work with Congress to advance the Financial CHOICE Act and other regulatory relief measures that will help unleash the full economic power of the nation’s community banks.”
However, many consumer advocacy groups were sharply critical of the House plan.
In a letter to Congress before passage of the bill, the non-profit group Americans for Financial Reform argued the legislation would have “a devastating effect on the ability of regulators to protect consumers and investors from Wall Street exploitation and the economy from financial risks created by too-big-to-fail megabanks.”
“Not only does it eliminate numerous major elements of the Dodd-Frank protections passed in the wake of the disastrous financial crisis of 2008, it would also weaken regulatory powers that long pre-date Dodd-Frank,” the group wrote in the letter. “If this bill passed, it would make financial regulation significantly weaker than it was even in the years leading up to the 2008 crisis.”