An updated House Republican plan to repeal the Dodd-Frank Act will be unveiled by the end of the month with provisions that would turn the independent Consumer Financial Protection Bureau into an executive agency with drastically limited powers and a removable director.
A spokeswoman for House Financial Services Chairman Jeb Hensarling (R-Texas) said he would work with President Donald Trump “to eliminate Dodd-Frank and replace it with the Financial CHOICE Act.” The bill “will be released in the next few weeks,” she said in a statement April 11.
According to a committee memo obtained by Bloomberg BNA, the revamped legislation will address more parts of Dodd-Frank than the original version of the bill, which was approved by Hensarling’s committee in 2016.
The announcement comes the same day as Trump renewed his call to pick apart the law with a “major streamlining” of its regulations.
“That will be the minimum,” he said to a group of business executives. “But we’re doing a major elimination of the horrendous Dodd-Frank regulations, keeping some obviously, but getting rid of many.”
According to the memo, the bill would broaden the scope of the Jumpstart Our Business Startups Act, a federal law passed in 2012 to promote capital formation. The measure would raise crowdfunding caps and relax restrictions on other ways for small startups to obtain investment dollars.
The bill also would require the SEC chairman to establish an advisory committee on the agency’s enforcement policies and procedures.
The full legislative text isn’t yet available, but the memo summarizing changes between the proposals indicates that under the new bill, the CFPB would be converted into the Consumer Financial Opportunity Agency—an executive agency with a sole director removable at will by the president. The deputy director of the agency also would be appointed and removed by the president.
Under Hensarling’s original bill, the so-called Consumer Financial Opportunity Commission would have been a bipartisan independent commission serving staggered terms.
The CFPB’s status as an independent agency has been the subject of a prolonged legal battle. A federal appeals court in Washington ruled in 2016 that the president has the authority to fire the agency’s current director, Richard Cordray, for any reason at any time. But in early 2017, the court granted the agency a second chance to assert that it should be insulated from the White House, meaning the president could only oust the director for cause. A panel of judges is scheduled to hear oral arguments in May.
Under Hensarling’s updated bill, the new agency would be an enforcement agency only, without supervisory functions. It would have the power to enforce enumerated consumer protection laws only and its consumer complaint database could not be published.
The director of the Federal Housing Finance Agency, which oversees mortgage-finance giants Fannie Mae and Freddie Mac, also would be removable by the president under the new legislation. Hensarling’s original bill called for restructuring the independent agency as a bipartisan commission.
The memo suggests the structure of the Office of the Comptroller of the Currency would be left intact. Hensarling’s original bill called for turning the agency that oversees national banks into a bipartisan commission.
To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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