The Financial CHOICE Act (HR 5983), which essentially seeks to undo much of the Dodd-Frank Act—including a sweeping overhaul of the Consumer Financial Protection Bureau (CFPB)—moved from the Financial Services Committee last month and will go before the full House of Representatives. A review of the bill, introduced by U.S. Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, has yet to be scheduled.
The bill contains a laundry list of proposed changes to the CFPB. Among them, the legislation would eliminate Directory Richard Cordray’s position, replacing it with a bipartisan, five-member commission empowered to promote consumer protections as well as competitive markets. The commission would be subject to congressional oversight and appropriations. Currently, the CFPB is funded primarily from the Fed’s operating budget, with certain caps, and its budget is not subject to congressional approval. The legislation also would require the commission to obtain permission before collecting personally identifiable information on consumers, repeal authority to ban bank products or services it deems abusive, and annul its authority to prohibit arbitration. The CFPB’s name would be changed to the Consumer Financial Opportunity Commission (CFOC).
The legislation would repeal the Financial Stability Oversight Council’s authority to designate firms as “systematically important financial institutions,” thus ending “too big to fail” bailouts, and replace a section of the Dodd-Frank Act with a new chapter in the bankruptcy code that’s designed to handle the failure of large, complex financial institutions. The bill also demands greater accountability and transparency from the Federal Reserve, and calls for a requirement that all financial regulators conduct a detailed cost-benefit analysis of all proposed regulations.
The Financial CHOICE Act “ends taxpayer-funded bailouts once and for all; stops the cronyism that allows the powerful and well-connected to game our system; lifts bureaucratic red tape—intended for big banks on Wall Street—off of community banks on Main Street; requires banks to be well capitalized to prevent another financial crisis; and puts in place the toughest penalties in history to protect consumers from fraud and deception,” Hensarling said. The acronym “CHOICE” in the legislation’s name stands for “Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs.”
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