U.S. Sen. Sherrod Brown of OH, the top Democrat on the Senate committee that oversees banking laws, said the proposal would gut the Consumer Financial Protection Bureau, which has returned nearly $12 billion to 29 million Americans who were cheated by shadowy debt collectors, for-profit schools, and payday lenders.
The Financial CHOICE Act undercuts several major provisions in Dodd-Frank, including the Consumer Finance Protection Bureau, an independent agency now empowered to protect consumers from deceptive banking practices through fines, lawsuits and market rules.
Republicans say many requirements imposed under what is known as the Dodd-Frank Act, named after its Democratic sponsors, have harmed economic growth by making it harder for consumers and businesses to get loans.
On Thursday, House Republicans are set to vote on a bill that would significantly repeal or alter major parts of the 2010 Dodd-Frank Act. The house bill also aims to scale back the authority of the Consumer Financial Protection Bureau, which was created under Dodd-Frank to regulate large banks and payday lenders, and is designed to operate as an independent watchdog with a single director.
"Our community banks are in trouble", Ryan said. He said it was unlikely that changes to the CFPB would make it into any bill that would pass. It would also repeal a Labor Department regulation that puts client interests ahead of investment brokers'. The law created a myriad of regulatory agencies with vague rules that have been fleshed out by unelected regulators, which during the Obama era tended to be hostile to private business.
Senate Majority Leader Mitch McConnell (R-Kentucky) has not been optimistic about a Dodd-Frank reversal passing the high chamber.
In a report on regulatory reform, the Federal Reserve described the US banking system as much more robust and resilient than it was before the financial crisis. A bipartisan group of lawmakers in the Senate is working on their own proposal that would keep many Dodd-Frank protections in place.
"Every promise of Dodd-Frank has been broken", Hensarling said in a statement.
According to the Congressional Budget Office, the Financial Choice Act would reduce the federal deficit by $24.1 billion between 2017 and 2027. But it also introduces an element of risk, as a "systemically important" financial institution could fail, just like Lehman Brothers did in 2008, triggering the near-meltdown of the global financial order.