A bill to overhaul the controversial 2010 Dodd/Frank financial reform bill has recently passed out of a House Committee.
“We remain stuck in the slowest and weakest economic recovery in our history,” said Jeb Hensarling, a Texas Republican Congressman and Chairman of the House Financial Services Committee in a speech to the New York Economic Club in June. “Why is this happening? One of the principal reasons is the Dodd-Frank Act, a grave mistake Washington foisted upon the American people nearly 6 years ago. Simply put, Dodd-Frank has failed. It’s time for a new legislative paradigm in banking and capital markets.”
To solve this crisis, Hensarling has offered the Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs or CHOICE Act which passed out of the House Financial Services Committee on September 13 and among a series of reforms is an end to too big to fail for large banks.
“The answer is simple: bankruptcy over bailout,” said Jeb Hensarling a Republican from Texas and Chairman of the House Financial Services Committee in a speech in front of the Heritage Foundation introducing the bill.
According to Hensarling, if the CHOICE Act passes a new sub-category of the bankruptcy system will be created for large banks all while eliminating future bailouts.
While conservatives have generally lined up behind the bill, Democrats have been equally opposed to it.
During mark-up California Congresswoman Maxine Waters issued this stinging rebuke, “Your proposal would several undermine all the progress we have made since the depths of the financial crisis. I cannot stress enough how detrimental this new world order would be: allowing banks to opt out of Dodd/Frank.”
Waters is referring to the portion of the law which allows banks which hold extra in capital reserves to opt out of the law entirely; under the plan banks with at least 10 percent in reserve and a CAMELS rating of 1 or 2. CAMELS measures a banks overall financial health with 1 and 2 being the top rating.
Another high profile opponent is Massachusetts Senator Elizabeth Warren and at issue is another controversial portion of the Dodd/Frank bill: The Consumer Financial Protection Bureau (CFPB).
The CFPB was the brainchild of Warren even before she joined the Senate and was added into Dodd/Frank as another regulatory body to protect consumers from discrimination in financial transactions.
But Republicans have long argued the CFPB has too much power and takes legislative authority away from Congress and places it into the hands of unelected bureaucrats.
The CFPB has been a magnet for controversy since its inception and was ironically accused by employees of engaging in discrimination against minorities and females in 2014.
According to the CHOICE, the CFPB along with the Office of Comptroller of the Currency, and the Federal Housing Finance Agency will be headed by bipartisan commissions, each currently has a single director.
The CHOICE Act still has an uphill climb. According to Sarah Rozier, communication director for the House Financial Services Committee, a full House vote has yet to be scheduled and there is no comparable bill in the Senate.
While neither Presidential candidate has spoken about the CHOICE Act, Hillary Clinton has been generally favorable to Dodd/Frank while Donald Trump said he plans to “dismantle” the bill.
After spending a decade in finance, Michael Volpe has been a freelance investigative journalist since 2009. His work has been published locally in the Chicago Reader, Chicago Crusader, Chicago Heights Patch, and New City. Nationally, Volpe’s work has appeared in a wide variety of publications including the Washingt
on Examiner, the Daily Caller, Crime Magazine, the Southern Christian Leadership Conference Newsletter, and Counter Punch. Volpe has been recognized by whistleblowers as leading the charge in getting their stories out. His first book Prosecutors Gone Wild was published in October 2012, his second book The Definitive Dossier of PTSD in Whistleblowers was published in February 2013 and his third book Bullied to Death was published in August 2015.