In a transparently partisan vote today, the House passed the 2017 Financial CHOICE Act (commonly referred to as “CHOICE Act 2.0”), leaving the future of the bill to be determined by the Senate.
The first version of the anti-Dodd-Frank legislation was introduced by Rep. Jeb Hensarling of Texas in 2016, and it was touted as a bill that would provide relief to financial institutions that have been, as many assert, overburdened by the 2010 Dodd-Frank regulations. The CHOICE Act was then amended, ostensibly to soften some of the anti-regulation sentiment, before being submitted by Committee to the House for vote.
The Executive Summary of the CHOICE Act identifies several key goals of the proposed legislation:
- End bank bailouts, but make modifications to the Bankruptcy Code as an alternative
- Strengthen penalties for fraud and deception to hold Wall Street accountable
- Create more oversight of regulators and take power from Washington
- Create Advantages for Capital Election
- Provide regulatory relief for Main Street/smaller financial institutions
- Considerable reforms to the structure and power of the Consumer Financial Protection Bureau (the “CFPB”).
With respect to the CFPB, the constitutionality of which has already been challenged through the PHH Mortgage litigation (under review in the D.C. Circuit), the current structure would be modified to create more oversight and checks against the power of the Director, in addition to permitting the President to terminate the director at will.
Obtaining the required 60 votes from the Senate will be challenging, so Rep. Hensarling and other supporters of the bill have much work ahead to work across the party line if the CHOICE Act can cross the next threshold in order to be enacted.
The Republican-majority House vote in favor of CHOICE Act 2.0 today echoes the campaign sentiment of President Trump, who consistently promised to “dismantle” Dodd-Frank. BSCR’s Financial Services Law team will continue to monitor the progress of the bill and provide prompt updates as they are received.