Three members of the House Financial Services Committee have released statements regarding the introduction of a discussion draft of the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs) Act, released by Committee Chair Jeb Hensarling (R-Texas). According to Hensarling, the Act would repeal the "failed" Dodd-Frank Act and offer "all Americans greater opportunities to raise their standards of living and achieve financial independence by replacing Dodd-Frank with real reforms that work" (see Banking and Financial Law Daily, June 24, 2016).
"Wrong Choice Act." According to Rep. Maxine Waters (D-Calif), Ranking Member of the Committee, "The Wrong Choice Act would allow megabanks and other financial institutions to choose a regulatory regime of their own liking, while limiting choices for consumers to get help when they’re ripped off." Waters also emphasized that the British vote to leave the European Union resulted in tumult in the financial markets, demonstrating that financial stability is more important than ever. Waters also said that the "Wrong Choice Act" would:
- impose weak capital standards on banks without limits on risky activity, making our financial markets once again subject to the same kind of risky behavior that caused the financial crisis;
- repeal Orderly Liquidation Authority, the mechanism by which failing financial institutions are safely wound down so they don’t present a risk to the economy;
- repeal the Volcker Rule, which is designed to stop banks from gambling with taxpayer money;
- repeal the Financial Stability Oversight Council’s ability to designate non-banks as systemically important financial institutions (SIFIs);
- abolish the Office of Financial Research, which provides research and information to help inform the FSOC’s deliberations;
- gut the Consumer Financial Protection Bureau by making it a commission, subjecting it to the annual appropriations process, and preventing it from stopping abusive practices;
- subject all federal financial regulators to the annual appropriations process, thereby politicizing regulatory oversight and placing funding for financial regulators at risk;
- turn the Office of the Comptroller of the Currency and the Federal Housing Finance Agency into slow-moving commissions, injecting them with unnecessary layers of bureaucracy and political gridlock;
- place monetary policy at risk by curtailing the Federal Reserve’s discretion in taking into account a wide range of dynamic economic data and subjecting policy decisions to short-term political pressure; and
- hinder the SEC’s efforts to promulgate a fiduciary rule that is consistent with the Department of Labor’s recently finalized rule, to the detriment of American seniors and investors and to the benefit of unscrupulous financial advisers.
Competitive marketplace. Representative Randy Neugebauer (R-Texas), a member of the Financial Services Committee, said that "This legislation would create an environment in which competition and consumer choice can rule the markets instead of the government picking winners and losers. This is done in part through high capital requirements that make financial institutions more resilient and stable. In return for these higher capital requirements, financial institutions would be subject to much lower government involvement. This ensures that the American people are protected, but that banks are not being micromanaged from Washington." According to Neugebauer, American consumers need a competitive marketplace in which they can choose the products to best fit their needs.
Disproportionately harms minorities. Expressing his full support for the Financial Choice Act, Rep. Frank Guinta (R-NH) said one of the "key" components is the inclusion of his bill, the Indirect Auto Financing Guidance Act, which would rescind CFPB findings, "based on unscientific data," that dealer financial discretion disproportionately harms minorities. "A House Financial Services Committee report showed that the CFPB, lacking precise data, mistakenly paid sums to many white borrowers, after collecting large settlements from auto lenders. The agency may have illegally coordinated its activities with other agencies to pressure auto lenders to settle with the federal government, as well as hoarded settlement money," said Guinta.
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