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Get ready: Congress fires up Dodd-Frank, CFPB overhaul

Committee hearing date set for Financial CHOICE Act 2.0

US Capitol

The Dodd-Frank doomsday clock just ticked a little closer to midnight. 

The Republican-crafted plan to overhaul the country’s financial regulatory system and overturn many provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act is now one step closer to becoming a reality, as House Financial Services Committee Chairman Jeb Hensarling, R-TX, announced Wednesday that the Committee will hold a hearing to discuss the updated version of the Financial CHOICE Act on Wednesday, April 26 at 10:00 a.m. Eastern.

And for the first time, Hensarling revealed the full version of the Financial CHOICE Act of 2017.

Hensarling is the shepherd of the Financial CHOICE Act, having first introduced a different version of the act last year.

The bill aimed to replace Dodd-Frank with a “pro-growth, pro-consumer” alternative that would end “too-big-to-fail” bailouts, bring significant reforms to the Consumer Financial Protection Bureau, and provide some regulatory relief for certain financial institutions.

That bill made its way out of the House Financial Services Committee but never came up for a full vote in the House of Representatives.

Then, earlier this year, rumors began to circulate that Hensarling planned to reintroduce a more aggressive version of the Financial CHOICE Act.  

Last week, the financial industry got its first look at the Financial CHOICE Act 2.0, which would bring serious changes not only to the CFPB, but to the Federal Housing Finance Agency, the Office of the Comptroller of the CurrencyFederal Deposit Insurance Corp. and the National Credit Union Administration as well.

One of the main changes of the Financial CHOICE Act 2.0 (previewed here) is that under the bill, the director of the CFPB would be fireable at will, rather than for cause only, as it stands now.

That provision is at the core of one the biggest legal battles in the financial industry right now, with the CFPB on one side, defending its authority and reason for existing, and PHH Mortgage Corp. and the Department of Justice on the other side.

But the Financial CHOICE Act 2.0 wouldn’t just change the leadership structure of the CFPB, it would also change the agency’s entire mission.

Under the new version of the bill, the CFPB’s supervisory authority would be eliminated entirely.

Per the summary of the CHOICE Act 2.0, the CFPB would become an enforcement agency only, without supervision functions. It would have power to enforce “enumerated consumer protection laws only,” without any UDAP (Unfair, Deceptive or Abusive Acts and Practices) authority.

Additionally, the CFPB’s controversial consumer complaint database would no longer be published.

In a statement, Hensarling said that Republicans are “eager to work with the president to end and replace the Dodd-Frank mistake with the Financial CHOICE Act because it holds Wall Street and Washington accountable, ends taxpayer-funded bank bailouts, and unleashes America’s economic potential.”

Hensarling adds, “We want economic opportunity for all, bailouts for none. We want real consumer protections that will give you more choices. Our solution grows the economy from Main Street up, creates more opportunities for working families to get ahead, and levels the playing field with no more Wall Street bailouts.”

Along with publicizing the date of the hearing, Hensarling’s office also released a brief summary of the bill and a full discussion version of the bill.

According to Hensarling’s office, the Financial CHOICE Act would bring “accountability” to both Washington, D.C. and Wall Street.

“The Financial CHOICE Act includes the toughest penalties in history for those who commit financial fraud and insider trading. Holding Wall Street accountable with the toughest penalties in history will deter corporate wrongdoing and better protect consumers,” Hensarling’s office said.

“At the same time we hold Wall Street accountable, the Financial CHOICE Act also holds Washington accountable,” the statement continued. “Tougher accountability for Wall Street and Washington will protect the integrity of our markets so they benefit ordinary Americans who are working, saving and investing.”

In the eyes of Hensarling, Dodd-Frank failed and needs to be replaced.

“Supporters of Dodd-Frank promised it would lift the economy, end bailouts and protect consumers. Yet Americans have suffered through the worst recovery in 70 years, Dodd-Frank guarantees future bailouts for Wall Street, and consumers are paying more and have fewer choices,” Hensarling said.

“Dodd-Frank failed to keep its promises to the American people, but we will work with President Trump to follow through on his promise to dismantle Dodd-Frank,” Hensarling said. “That’s not what Wall Street wants, but it is what hardworking Americans need to have a healthier economy with more opportunities so they can achieve financial independence.”

To read the full 593-page discussion draft of the Financial CHOICE Act of 2017, click here.

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