A new memo about future plans reportedly from House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, reveals an even more aggressive version of the Financial CHOICE Act, the Republican-led effort to repeal and replace Dodd-Frank, with the Consumer Financial Protection Bureau facing some of the most drastic changes, according to an article in CNBC by Ylan Mui.
The article stated that the memo shows Hensarling is strengthening his attack on the CFPB and scaling back regulations on bank living wills and stress tests in new legislation, which is expected to be introduced soon.
However, the CNBC article added that a spokesman from Hensarling's office said he could not confirm its accuracy.
But if the memo is accurate, here’s what could change, per the CNBC report:
The bill would turn the head of the consumer watchdog agency into a political appointee who can be dismissed at will rather than the director of an independent agency, the memo states. The previous bill called for a five-member commission to lead the CFPB.
According to the memo, the bill would strip the agency of its authority to bring cases against financial institutions under a provision known as unfair, deceptive and abusive practices, and eliminate databases of consumer complaints.
The memo outlining the updates to the Texas Republican's bill was dated Feb. 6 and addressed to the committee's leadership team.
President Donald Trump signed an executive order earlier this week to begin the roll back the Dodd-Frank Wall Street Reform Act. However, while coming from the president’s desk, it doesn’t do much by itself. Instead, the move mostly points to the existing act championed by Hensarling, the CHOICE act, Mayer Brown attorneys Laurence Platt and Joy Tsai explained.
The blog stated that the core principles identified in the executive order mirror key principles in the “Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs” Act (CHOICE Act) by Hensarling. “A sign that the Executive and Legislative branches intend to collaborate to replace at least some Dodd-Frank provisions with CHOICE,” the blog stated.
Now, in the same week, CNBC is reporting that Hensarling is already planning to introduce new legislation on Dodd-Frank, and soon.
At the time of Trump’s executive order on Dodd-Frank earlier this week, Hensarling said, “I’m very pleased that President Trump signed this executive action, which closely mirrors provisions that are found in the Financial CHOICE Act to end Wall Street bailouts, end ‘too big to fail,’ and end top-down regulations that make it harder for our economy to grow and for hardworking Americans to achieve financial independence.”
As far as the fate of the CFPB and its Director Richard Cordray, it could swing many directions. Beyond the ongoing landmark case between PHH and the CFPB that’s still ongoing, Sens. Deb Fischer, R-Nebraska, John Barrasso, R-Wyoming, and Ron Johnson, R-Wisconsin, recently introduced a bill that would replace the single director of the CFPB with a five-member bipartisan committee.
According to Fischer's office, this is actually the third version of this bill, which she previously introduced in each of the previous two congressional sessions to no avail.
But the supposed memo from Hensarling would weaken the CFPB, remove some of its authority, and make the PHH case, which is over the constitutionality of the CFPB's leadership structure, a moot point, because the president could fire the CFPB director for any reason, rather than for cause.