House GOP Unveils Dodd-Frank Overhaul Draft, Sets April 26 Hearing

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By Rob Tricchinelli

House Republicans have unveiled a draft of their new Dodd-Frank Act replacement effort, the Financial Choice Act, and will hold a committee hearing April 26 on the bill.

The sweeping legislation, led by House Financial Services Committee Chairman Jeb Hensarling (R-Texas), seeks to roll back numerous banking and securities regulations created by Dodd-Frank. The bill offers regulatory relief to banks that meet heightened capital standards.

The bill takes a more ambitious approach than a previous version approved by the committee in 2016. The April 26 hearing is to “discuss” the bill, which hasn’t formally been introduced.

A panel vote hasn’t yet been scheduled, but some committee members have said the bill is likely to proceed to the floor within several weeks of its introduction.

What’s Next

The bill reflects House Republicans’ priorities on altering Dodd-Frank, but Senate Republicans, including Banking Committee Chairman Mike Crapo (Idaho), have yet to reveal their intentions.

Crapo paints himself as a bipartisan dealmaker, and if the Choice Act were offered in the Senate it would face stiff resistance from Democrats.

A bill introduced in 2015 by former Banking chairman Richard Shelby (R-Ala.) was more limited in scope than the Choice Act, but Democrats still uniformly opposed it in committee.

President Donald Trump has said several times that he wants to roll back substantial parts of Dodd-Frank.

Substance

The House bill would affect many aspects of financial regulation. It would repeal the “orderly liquidation authority” that allows the federal government to help wind down failing banks, replacing it with additional bankruptcy provisions. It would also repeal the Volcker Rule, which prevents proprietary trading by banks, and the Labor Department’s fiduciary rule.

The Consumer Financial Protection Bureau would be stripped of many of its powers and subject to congressional appropriations. The Federal Reserve also would be subject to heightened congressional scrutiny.

The legislation draft would increase Securities and Exchange Commission enforcement penalty caps, require more cost-benefit analysis for financial rulemaking, and supersede a case-law requirement that judges defer to agencies’ interpretations of the laws they implement.

Additionally, the Choice Act would expand small issuers’ ability to raise capital using securities-law exemptions from the 2012 Jumpstart Our Business Startup Act.

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

To contact the editor responsible for this story: Phyllis Diamond at pdiamond@bna.com

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