The House of Representatives will vote on the Financial CHOICE Act this week, which will repeal a lot of the Dodd-Frank Reform Act. The Hill reported:
The CHOICE Act is an effort to undo much of Dodd-Frank, a law long panned by Republicans as a burden on the U.S. economy and businesses. The bill, sponsored by House Financial Services Committee Chairman Jeb Hensarling (R-Texas), passed that panel earlier this month with unanimous Republican support and unified Democratic opposition.Hensarling’s bill would allow banks to opt out of Dodd-Frank if they hold enough cash, and it would limit federal stress tests of major banks to every two years. The bill would remove the power through which the federal government can label a bank “too big to fail,” and take it apart before a collapse.
The bill will more than likely pass along party lines. All Democrats in the House will probably oppose it. Speaker Paul Ryan (R-WI) praised the bill:
“This is a jobs bill for Main Street. It will rein in the overreach of Dodd-Frank that has allowed the big banks to get bigger while small businesses have been unable to get the loans they need to succeed,” Speaker of the House Paul Ryan said in a statement. “With the Financial CHOICE Act, the era of taxpayer-funded bailouts and too big to fail is over.”
Dodd-Frank wanted to stop big banks from growing, but it has done the opposite according to The Daily Caller:
Despite the act’s intentions, large banking institutions have grown dramatically since the passage of Dodd-Frank, and small community banks have incurred serious losses trying to keep up. Crippling regulations saddled smaller banks, forcing American consumers to market with fewer investment vehicles and greater costs.Prior to Dodd-Frank, some 75 percent of banks offered free-checking. That figure fell to 39 percent just two years after Dodd-Frank came into effect. Consumers are paying more and getting less because of Dodd-Frank. Low-income consumers suffer the most, according to research by the International Center for Law and Economics.
Despite easy passage through the House, the bill may not make it through the Senate. The Hill reported that the senators “on the Banking Committee have shown more interest in a smaller bill focused on community bank relief than the House’s sweeping changes.”
Treasury Secretary Steven Mnuchin has not endorsed the bill, but the department will “release its first report reviewing major portions of Dodd-Frank by Friday.” The Hill reported:
One directed Treasury Secretary Steven Mnuchin to assess the Financial Stability Oversight Council’s (FSOC) process of designating banks and financial firms “too big to fail.”FSOC, a multiagency group established in Dodd-Frank, monitors financial risks and designates certain banks and financial firms as “systemically important financial institutions” (SIFIs). That label subjects banks to tougher federal oversight, and Republicans claim the designation is applied inconsistently and arbitrarily.
Mnuchin and the department will also release its findings on the orderly liquidation authority (OLA), which is in Dodd-Frank. This process allows the government to “help SIFI-designated institutions sell off their assets without triggering an economic crisis.”
Republicans have blasted this part of Dodd-Frank, which they called a “bailout” and voiced an opinion “replace it with a new bankruptcy process.”
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