House Republicans made headway on President Donald Trump's pledge to dismantle post-crisis financial rules by approving a sweeping bill Thursday that rips up major aspects of the Dodd-Frank Act.
The CHOICE Act would shield some financial institutions from Dodd-Frank restrictions that limit risk-taking - which was a major factor in the mortgage industry collapse that preceded the financial crisis and Great Recession.
House Speaker Paul Ryan disagreed and said it "is a jobs bill - one that will bring hope back to Main Street" and help thousands of small businesses that are hoping to hire and expand.
The bill would also remove the fiduciary rule, scheduled to into affect this week, that adds tough new requirements for brokers and investment advisors to act in the best interests of their clients when dealing with retirement accounts.
The FCA also would restructure the Consumer Financial Protection Bureau (CFPB) and make it harder for that agency to peruse those engaged in predatory lending practices.
The act was created to protect taxpayers by ending wholesale government bailouts of banks and non-bank financial institutions that encouraged indiscriminate lending.
Considerable reforms to the structure and power of the Consumer Financial Protection Bureau (the "CFPB"). "In the House, we just threw it off", said Jeb Hensarling, chairman of the House Financial Services Committee and the lead author of the bill.
Dodd-Frank was passed in 2010.
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Despite the bill's passage in the House, the prospects that it will become law are dim.
Rep. Walter Jones of North Carolina was the only Republican to vote against the bill. Despite having nothing to do with the financial crisis, community banks, their hundreds of employees and thousands of customers have felt the brunt of this law. It would give banks that reach certain cash thresholds an off-ramp from Dodd-Frank, reduce the frequency of federal stress tests and restrain oversight powers of several federal agencies that the 2010 law expanded.
Kentucky Congressmen Brett Guthrie and James Comer released statements that expressed their reasoning behind their support for a recently passed bill in the U.S. House of Representatives.
"Hopefully, the nightmare of Dodd-Frank will be gone soon", Hensarling, a Texas Republican, said in an interview Thursday.
The bill now moves to the U.S. Senate.
In a meeting with business leaders in April, Trump singled out Dodd-Frank as an example of what he called "horrendous" regulations, and pledged to fix it.
This new legislation will end taxpayer-funded bailouts once and for all and ensure no company remains "too big to fail".
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