GOP-run House votes to roll back post-2008 financial rules

Gladys Abbott
June 9, 2017

But the design of the CFPB's leadership and financing, while unusually strong, is not unique among government agencies. Republicans have long complained that the law stifled the economy because it put too large a regulatory burden on business.

Put simply, Dodd-Frank has been a complete failure. "We applaud Chairman Hensarling and members of the House Financial Services Committee for their continuing efforts to fix financial rules that are holding back the USA economy, and doing little to enhance safety and soundness". "They promised us it would lift the economy, Mr. Chairman, but instead we are still stymied in the weakest, slowest recovery in the post-war era".

The culprit behind those growing piles of financial regulations is the Dodd-Frank Act, passed by Congress in response to the banking collapse that led into the so-called Great Recession.

Dodd-Frank was based on the false idea that the 2008 financial crisis was caused by insufficient regulation of the private sector.

The bill will go on to the Senate, where the Republicans will have to scrounge together the votes of at least eight Democrats - or make more moderate changes to the legislation - in order for it to pass.

"This is the Republican plan to reform Wall Street and revitalize Main Street — all while protecting the financial futures of Americans", Speaker Paul Ryan, R-Wis., said in a statement Monday.

Freshman Rep. James Comer, who was a director of a community bank before coming to Congress, said he saw firsthand the impact of Dodd-Frank on small banks.

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.

Democratic lawmakers are overwhelmingly opposed to the bill, which also faces major obstacles in the Senate.

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House Financial Services Committee Chair Jeb Hensarling, aficionado of industry-paid junkets, knows this. "This is an very bad bill".

Consumer groups said the measure would "gut" the Consumer Financial Protection Bureau, a watchdog agency for financial fraud.

The Congressional Budget Office said last month that Hensarling's bill would deliver more than $24 billion in deficit reduction over 10 years, including $14.5 billion from the elimination of the Orderly Liquidation Authority.

The other solution, of course, would be to use tools like unions, regulations, monetary policy, and fiscal policy to cut the rich down to size, redistribute wealth, empower workers, and raise incomes.

The bill is expected to pass in the House on Thursday, largely along partisan lines.

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. "We're losing a community bank or credit union a day". That famous regulation concerned the separation of commercial and investment banking, but in Republican hands, it just means unburdening smaller banks more than the already unburdened mega-banks.

"The big banks are bigger, the small banks are fewer", Hensarling said. It would also change the way federal law deals with failing financial institutions, which some critics say again supports a "too big to fail" approach.

Known as community banks for their local focus, these institutions are mother-and-child figures on Capitol Hill, inspiring love and support on both sides of the often miles-wide aisle.

It will impose regulatory discipline on agencies by requiring them to conduct proper cost-benefit analysis of regulations, including retrospective review. "But you have to solve the problem of how [to] let these banks go out of business without crashing the system".

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