While Everyone Was Watching Comey, House GOP Voted To Gut Dodd-Frank
- Author: Zachary Reyes Jun 10, 2017,
Jun 10, 2017, 9:25
The House of Representatives passed a bill Thursday that would roll back financial and banking reforms implemented after the 2008 financial crisis.
According to CNBC, one of the major aspects of the Dodd-Frank law and one that could be done away with are annual stress tests banks must now undergo to prove their ability to weather a crisis.
The Financial CHOICE Act now moves onto the Senate for consideration.
House Speaker Paul Ryan said the measure "delivers regulatory relief.small banks so desperately need".
Schoenholtz believes the "off-ramp" is a mistake for banks that raise certain levels of capital to escape the more onerous regulatory provisions.
It would also repeal the Volcker rule that restricts banks from making speculative investments.
Dodd-Frank was signed into law by President Barack Obama in July 2010 to further regulate the country's financial system and protect investors after the financial crisis.
Dodd-Frank became law after the financial crisis of almost a decade ago, the result of irresponsible lending and banking practices. The Dodd-Frank provision championed by former Federal Reserve Chairman Paul Volcker is meant to keep banks from taking gambles that could lead to a government bailout.
Congressman Daniel Webster is applauding the passage of the Financial Choice Act.
"Hopefully, the nightmare of Dodd-Frank will be gone soon", Hensarling, a Texas Republican, said in an interview Thursday. Potential areas for compromise include changes to how much capital banks must maintain and decreasing the paperwork burden for small lenders.
The bill is the second passed by the House of Representatives that is unlikely to become actual law.
The bill, called the CHOICE act, was approved by a vote of 233-to-186. According to a 2017 report from S&P Global, the seven largest USA banks would have to collectively raise hundreds of billions of dollars in new equity to meet the new capital requirement and receive regulatory relief. And it would let the president remove the CFPB director at will without citing a cause for firing.
The Federal Reserve counted 5,031 commercial banks as of May 1. "While repealing this portion of Dodd-Frank won't do away with each state's self-procurement tax statutes, it will take the federal government out of the equation, which is always helpful". Sherrod Brown of OH, said "there are a lot of things we want to do to make Dodd-Frank better, but not wholesale sellout to Wall Street, which is what they want to do".