The House Financial Services Committee passed the Financial CHOICE Act Tuesday in a party line vote. The sweeping financial reform bill seeks to replace the Dodd-Frank Act and kill the Department of Labor’s fiduciary rule.
The bill passed out of committee by a 30-26 vote. Jeb Hensarling, R-Texas, committee chairman, hailed the bill as a remedy for "growth-strangling regulation."
“Democrats just voted against a bill that increases penalties against those who commit financial fraud," he said in a statement. "They just voted against a bill that ends taxpayer-funded bailouts, and they just voted against legislation that provides relief from Washington’s crushing regulatory burden for small banks, credit unions and consumers.”
With President Barack Obama wielding a veto pen threat, the bill is unlikely to become law.
Among the many changes the bill proposes, it would block the DOL from implementing its new fiduciary rule by incorporating into the Retail Investor Protection Act, which passed the House last year. Introduced by Rep. Ann Wagner, R-Mo., the RIPA requires the Securities and Exchange Commission to move first on a fiduciary rulemaking before the DOL can act.
The bill eliminates several Dodd-Frank provisions, including federal "bailouts" and the Volcker Rule, which restricts trading activities at banks.
Under CHOICE -- which stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs -- the Financial Stability Oversight Council would no longer be able to designate risky non-banks and others as “systemically important financial institutions."
The FSOC was created by Dodd-Frank to review the systemic risk to the capital markets presented by large, global financial institutions. Large insurers such as MetLife have fought the designation.
The FSOC’s authority to break up a large financial institution if the Federal Reserve finds that the firm “poses a grave threat to the financial stability of the United States” would also disappear if the bill is passed.
Perhaps most controversial, the bill would require the Consumer Financial Protection Bureau to be subject to bipartisan oversight and congressional appropriations. A cost-benefit analysis performed by the Office of Economic Analysis would be required to support all new CFPB rules.
Congress is not expected to take up any serious legislation before the election. But Hensarling to re-introduce the bill next year.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at email@example.com.
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