House moves legislation to undo Obama-era bank rules

WASHINGTON — The House voted along party lines Thursday to repeal many of the stricter regulations enacted after the 2008 financial crisis, taking the first step in a long-held Republican desire to roll back landmark rules they complain are hurting banks, restricting consumer credit and slowing economic growth.

The legislation, which faces major hurdles in the Senate because of united Democratic opposition, would continue the Republicans’ deregulatory push under President Donald Trump by dismantling key parts of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

That law, passed with almost no Republican support, was the biggest overhaul of financial regulations since the Great Depression and one of President Barack Obama’s signature accomplishments.

Dodd-Frank is strongly supported by consumer advocates, but opposed by banks and other financial firms.

Its key reforms included a prohibition on federally insured banks from engaging in risky trading, a new liquidation authority to safely shut down teetering financial giants to avoid future bailouts and the creation of the independent Consumer Financial Protection Bureau to oversee credit cards, mortgages and other financial products.

The House legislation, called the Financial Choice Act, would undo or scale back much of Dodd-Frank. The bill was approved 233-186. All but one Republican — Walter Jones of North Carolina — voted for the bill. No Democrats supported it.

Its major changes include repealing the trading restrictions, known as the Volcker Rule, and scrapping the liquidation authority in favor of enhanced bankruptcy provisions designed to eliminate any chance taxpayers would be on the hook if a major financial firm collapsed.

The bill also would repeal a new Labor Department regulation, largely still pending, that requires investment brokers who handle retirement funds to put their clients’ interests ahead of their own compensation, company profits or other factors.

And in a move vociferously protested by Democrats, the measure would gut the powerful consumer bureau.

The agency — the centerpiece of Dodd-Frank — has provided consumers about $12 million in refunds, mortgage principal reductions and other relief since opening in 2011. It played a key role in penalizing Wells Fargo & Co. for its creation of about 2.1 million unauthorized accounts.

The Financial Choice Act would strip the agency of its ability to closely monitor financial firms for compliance with consumer protection laws and specifically prohibits the bureau from writing any regulations on payday and car-title loans.

The bureau’s director would be subject to removal by the president for any reason and the agency’s independent funding stream would be eliminated, making it subject to congressional appropriations where Republicans could reduce its budget.