Dodd-Frank Overhaul Bill Approved by House Committee

By Rob Tricchinelli

A major overhaul of the Dodd-Frank Act took a step forward May 4 as the House Financial Services Committee approved it in a party-line vote, 34-26.

The vote concluded a three-day markup of the bill (H.R. 10), during which Democrats slowed down the process and unsuccessfully tried to remove various portions of the bill.

The bill would repeal the Volcker Rule and Labor Department’s fiduciary rule, strip away the Federal Deposit Insurance Corporation’s ability to wind down large banks in a crisis, increase oversight of the Federal Reserve, restrict shareholder proposals and modify the Securities and Exchange Commission’s enforcement authority. Republicans rejected Democrats’ attempts May 4 to undo each of those provisions, also in party-line votes.

Looking Ahead

The full House could vote to pass the bill later this month with the support of Speaker Paul Ryan (R-Wis.), but its prospects in the Senate are dimmer. Stiff Democratic resistance would make it difficult for the 52-seat Republican majority there to surmount a filibuster.

President Donald Trump has repeatedly criticized Dodd-Frank and said he wants to “do a big number” on the 2010 law.

“Our plan replaces Dodd-Frank’s growth-strangling regulations on small banks and credit unions with reforms that expand access to capital so small businesses on Main Street can grow and create jobs,” Committee Chairman Jeb Hensarling (R-Texas), who spearheaded the bill’s creation, said.

Debit-Card Fee Caps

Another part of the bill would repeal the “Durbin amendment,” named for Sen. Richard Durbin (D-Ill.), that caps swipe fees on debit card transactions.

Banks support the repeal but retailers want to keep it in place, arguing that the cap keeps costs down and savings get passed on to consumers. That split foreshadows a struggle over repeal once the full Choice Act heads to the House floor.

Several Republicans, including Reps. Bruce Poliquin (Maine) and Rep. Dennis Ross (Fla.), have expressed support for keeping the caps in place, although they both voted in favor of the Choice Act.

Poliquin was the lone Republican to vote in committee against a 2016 version of the bill that wasn’t as expansive in changing Dodd-Frank.

Partisan Debates

The markup and a preceding hearing reignited partisan debates over the Dodd-Frank Act and the cause of the financial crisis.

There were several heated exchanges between lawmakers during the week, one of which was set off after Rep. Carolyn Maloney (N.Y.), a senior committee Democrat, called the bill a “middle finger to consumers, investors, regulators and markets.”

Although Democrats all voted against the bill, some said they were willing to give regulatory relief to community banks. Rep. Brad Sherman (Calif.) asked Hensarling to break up the bill because there are sections dealing with capital formation and mortgage lending that could get bipartisan support.

Rep. David Scott (Ga.) was the only Democrat to oppose an amendment from his own party in the May 4 vote, declining to support the attempt to preserve the DOL fiduciary rule.

CFPB

Earlier in the week, Democrats unsuccessfully sought to remove language from the bill that would bring the Consumer Financial Protection Bureau under congressional appropriations and remove the bureau’s authority to fight “unfair, deceptive, or abusive acts and practices.”

The bill would rename the bureau the Consumer Law Enforcement Agency and make its director removable at-will by the president.

To contact the reporter on this story: Rob Tricchinelli in Washington at rtricchinelli@bna.com

To contact the editor responsible for this story: Seth Stern at sstern@bna.com

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