House Passes Dodd-Frank Rollback

Chris Gaetano
Published Date:
Jun 9, 2017

The House of Representatives passed a bill that, if implemented, would roll back certain key provisions of the Dodd-Frank Act, according to the New York Times. The bill, called the Financial Choice Act, was approved on a 233 to 186 vote along largely partisan lines. Should the bill be implemented as is, it would: 

* Give the president the ability to fire the head of the Consumer Financial Protection Bureau and the Federal Housing Finance Agency at will, while currently they can only be dismissed "for inefficiency, neglect of duty, or malfeasance in office;" 

* Significantly roll back the CFPB's powers by doing things like giving Congress the ability to set funding and possible abolish it entirely, replacing the single director with a five-member commission, repealing its authority to ban bank products or services it deems abusive, and repealing its authority to prohibit arbitration;

* Make all financial regulatory agencies be subject to a bill called the REINS Act, which increases Congressional oversight on major regulatory changes;

* Require financial regulators to conduct across-the-board cost-benefit analysis of all proposed regulations,

* Reauthorize the SEC with "funding, structural and enforcement reforms;"

* Institute due-process reforms for people who feel they have been the victim of a government shakedown;

* repeal the Chevron Defense doctrine;

* subject the Federal Reserve to the FORM Act, proposed legislation that (among many other things) subject the Federal Reserve to an annual audit by the GAO, and abolish the Office of Financial Research;

* Retroactively remove the authority of the Federal Stability Oversight Council (a body composed of the heads of the federal regulatory agencies) to designate certain financial institutions as systemically important or financial market utilities, both of which opens them up to further oversight and regulations;

* Repeal the Volcker Rule, which limits the amount of speculative investments banks can engage in; 

* Allow banks that make qualifying capital elections and maintain sufficient non-risk weighted leverage ratios to be exempt from the Dodd-Frank and Basel III supervisory regime, along with "any federal law, rule, or regulation that provide limitations on mergers, consolidations, or acquisitions of assets or control, to the extent the limitations relate to capital or liquidity standards or concentrations of deposits or assets."

* Allow banks to conduct their own stress tests, versus having outside regulators do them; 

* Remove considerations to financial stability risk when reviewing applications to consummate a transaction or commence an activity; 

* Increase penalties for financial fraud and self-dealing; 

* Give the SEC new authority to impose sanctions equal to investor losses in cases involving “fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement” where the loss or risk of loss is significant; 

* Eliminate the Department of Labor regulation requiring retirement investment advisers to follow the fiduciary standard; 

* Increase maximum criminal fines for individuals and firms engaged in insider trading and other "corrupt practices"; and

* Makes it so all fines collected by the Public Company Accounting Oversight Board and Municipal Securities Rulemaking Board would be remitted to the Treasury for deficit reduction. 

The Times said that the measure is unlikely to make it through the Senate in its current form, as Democrats are much stronger there. 

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