What Is the Financial CHOICE Act?

The term Financial CHOICE Act refers to a bill introduced in the U.S. Congress in 2017. The bill was designed to roll back regulations set by the Dodd-Frank Wall Street R🧜eform and Consumer🍬 Protection Act, which was passed in 2010 in response to the 澳洲幸运5开奖号码历史查询:2007-2008 financial crisis.

The bill aimed to relax regulations for financial institutions, including stress testing as well as capital and liquidity requirements. Republicans claimed Dodd-Frank was an example of regulatory overreach, despite studies suggesting it was likely responsible for increased financial stability. Since the Senate didn't push the bill forward, it died in the House.

Understanding the Financial CHOICE Act

Rep. Jeb Hensarling (R-TX), the chair of the 澳洲幸运5开奖号码历史查询:House Financial Services Committee, introduced the Financial CHOICE Act after Republicans won control of Congress in 2017. Much of the bill focused on rolling back regulations introduced by the Dodd-Frank Act, which was passed in response to the 澳洲幸运5开奖号码历史查询:financial crisis. Many observers felt that the lack of effective regulations targeting 澳洲幸运5开奖号码历史查询:financial institutions led to the financial meltdown.

Some of Dodd-Frank’s provisions increased transparency into financial products, particularly 澳洲幸运5开奖号码历史查询:derivatives. It also streamlined the regulatory process, eliminated regulatory exemptions, provided for a more orderly 澳洲幸运5开奖号码历史查询:winding up of bankrupt firms, and improved consumer protections. Financial institutions complained about the amount they spent to comply with the Act and that the economic benefit wasn't obvious. Wall Street claimed that removing regulations would make lendi💮ng easier and invigorate the economy.

The bill passed in the House of Representatives along party lines, 233-186 on June 8, 2017. Proponents touted it as a jobs bill that would allow the president to fire heads of the 澳洲幸运5开奖号码历史查询:Co💃nsumer Financial Protection Bureau (CFPB) and 澳洲幸运5开奖号码历史查询:Federal Housing Finance Agency (FHFA) at any time and for any reason. The bill also intended to:

• Give Congress oversight of the CFPB’s budget
• Eliminate the Orderly Liquidation Authority, a Dodd-Frank provision that allows the federal government to save large financial institutions from collapse
• Limit the CFPB’s scope by preventing it from prohibiting “unfair, deceptive, or abusive acts or practices” 
• Push for restricting 澳洲幸运5开奖号码历史查询:arbitration as a resolution mechanism

Congressional opponents of the bill were almost exclusively Democrats. Critics stated that rolling back regulations was unlikely to provide the benefits that its proponents claimed, that returns seen by Wall Street were not negatively impacted by having to comply with stricter standards, and that regulations were not leading to economic stagnation. The bill was not p🏅assed by the Senate, so its pro💟visions were not enacted.

Special Considerations

Although the Final CHOICE Act died, a similar bill was signed into law, which promised to provide some relief to segments of the 澳洲幸运5开奖号码历史查询:financial sector. The Economic Growth, Regulatory Relief, and Consumer Protection Act was signed by President Donald Trump on May 24, 2018, after it was approved by the House and passed by the Senate.

Acc💖ording to the bill, the Act provides the following:

• Relaxed lending rules for the mortgage industry and amendments to the 澳洲幸运5开奖号码历史查询:Truth in Lending Act (TILA) 
• Regulatory relief to community banks
• Consumer credit protections
• Alterations of capital threshold requirements by certain banks
• Encouragement for the formation of capital
• Protection for student loan borrowers

The Bottom Line

The Financial CHOICE Act was introduced to reduce regulatory burdens on financial institutions by allowing them to opt out of certain Dodd-Frank 🧔provisions in exchange for maintaining higher capital reserves. It aims to foster economic growth by promoting more flexibility for banks. Though it made it through the House, it did not make it through the Senate.