Reed Supports Rollback of Dodd-Frank Banking Regulations

The House of Representatives has voted to replace the 2010 Dodd-Frank law with their own sweeping financial regulatory bill, the Financial Choice Act.

On Wednesday, House Speaker Paul Ryan told reporters Hensarling's bill would keep the GOP's promise to cut onerous financial regulations in order to help create jobs and foster economic growth. Hensarling has said the bill would end Dodd-Frank's "taxpayer-funded bailouts of large financial institutions; relieves banks that elect to be strongly capitalized from growth-strangling regulation that slows the economy and harms consumers; imposes tougher penalties on those who commit financial fraud; and demands greater accountability from Washington regulators".

It eliminates the Volcker rule that limits trading activities by banks.

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 bill also gives the president the ability to fire the head of the Consumer Financial Protection Bureau, and gives Congress control of the agency's budget, meaning it could be defunded entirely. 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.

It still must be approved by the Senate before it can take effect, however, and that will be more of a challenge since it will require some Democrats to join the majority Republicans. Potential areas for compromise include changes to how much capital banks must maintain and decreasing the paperwork burden for small lenders.

U.S. Senator Kamala Harris (D-California) called the passage of the bill "disgraceful" on Friday, while U.S. Senator Dianne Feinstein (D-California) has previously described rollbacks to the Dodd-Frank Act as "dangerous".

The American Bankers Association applauded the House vote, saying the bill would "fix financial rules that are holding back the US economy, and doing little to enhance safety and soundness".

However, Democrats said the bill would bring about an economic catastrophe by eliminating vital regulations on the financial system. "The financial crisis exposed a broken regulatory system allowing Wall Street to gamble with Main Street's future". "The Dodd-Frank Act has had a lot of bad consequences for our economy, but most of all in the small communities across our country". But in the push to overhaul Dodd-Frank, Republicans said the biggest banks have only gotten bigger while local banks and credit unions are dwindling.

Former President Barack Obama responded to the financial crisis by imposing new rules and restrictions on the financial sector.

West Virginia's representatives - David McKinley, Alex Mooney and Evan Jenkins - voted for the legislation, joining most Republicans.

  • Zachary Reyes