Lawmaker goes after Dodd-Frank again
GOP’s Jeb Hensarling reportedly has plan to quash regulations
The Dodd-Frank Act and its consumer protection authority reportedly took another blow this week.
Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee and a critic of the banking law, sent a memo to the committee leadership outlining his plans to introduce “soon” new legislation to quash many bank regulations and regulators’ enforcement authority in Dodd-Frank, according to a CNBC report.
Hensarling ’s communication office referred questions to the committee. Staffers of several members of the committee did not immediately respond to messages seeking comment. CNBC, which obtained the memo, re- ported that a Hensarling staffer was unable to confirm the memo’s accuracy.
Last year, Hensarling introduced the Financial Choice Act, which aimed to remove some regulations in Dodd-Frank that the industry considers burdensome and costly.
President Trump also issued executive orders last week to roll back key financial regulations of the Obama era.
Dodd-Frank, passed in 2010 following the financial crisis, created the Consumer Financial Protection Bureau and established a wide array of rules on banks and financial services companies, including tests for liquidity and capital soundness, limits on predatory lending and curbing certain types of trading activity.
Emboldened by Trump’s actions, Hensarling plans to introduce a new bill that will be “more aggressive” than the Financial Choice Act, CNBC reported.
Many of Hensarling ’s proposals in the memo have been key bullet points in the financial industry’s lobbying on Capitol Hill.
Among them:
Turning the director of the CFPB into a political ap
pointee. The CFPB is an independent agency, funded by the Federal Reserve. Richard Cordray, the current director, is serving a five-year term, set to expire in 2018. In his earlier bill, Hensarling called for replacing the director with a five-member commission. Weakening CFPB’s reach. Hensarling is also looking to remove the CFPB’s authority to
bring cases against financial-services companies and individuals that it deems to have committed “unfair, deceptive or abusive acts or practices.” He also wants to remove the CFPB’s databases containing consumer complaints. The agency has received more than 1 million complaints since 2010. Loosening banks’ re
quirements. Hensarling ’s bill would remove the Federal Deposit Insurance Corp. from a review process to determine banks’ readiness in case of a recession. Large banks are required to submit “a living will” to the Federal Reserve and the FDIC, describing their strategy for “rapid and orderly resolution in the event of material financial distress or failure of the company.”
Banks also must maintain certain capital levels and maintain credit quality and are annually checked by regulators to ensure compliance. Hensarling wants this so-called “stress test” to be conducted every two years, CNBC reported.