Republicans have been gearing up to vote on a bill this week intended to rein in regulations enacted after the financial crisis.
The Financial CHOICE Act is primarily designed to rollback regulations implemented in response to the financial crisis of 2007. Supporters have argued the regulations have become too burdensome and unfair. The proposal would primarily target the Dodd-Frank Wall Street Reform Act which was enacted in response to the financial crisis.
House Speaker Paul Ryan said Monday that the bill will be considered this week. Ryan and others on the right are now making their case for why the bill is a better approach to Wall Street reform. Democratic lawmakers and other critics, however, warn the bill would jeopardize financial sector oversight.
“While the Dodd-Frank Act may have had good intentions, it overreached and in practice hurt Main Street and consumers while providing more protections for Wall Street,” a press release from the speaker’s office detailed Monday. “It has more rules and regulations than any other Obama-era law. But instead of instilling sensible regulation on the financial industry, it cozied the federal government up with big banks.”
House Majority Whip Steve Scalise tweeted out Monday that conservatives were united behind the need for reform. Rep. Sean Duffy of Wisconsin called Dodd-Frank a total disaster Friday while advocating for the Republican counter bill. Rep. Martha Roby of Alabama argued the bill would end bank bailouts, promote economic growth, and provide regulatory relief.
Michigan Republican Rep. Bill Huizenga stated Thursday the bill would restore opportunities and accountability in the financial sector. House Republican Conference Chair Cathy McMorris Rodgers on Friday argued Dodd-Frank failed to achieve its intended goals, and so a new approach is required.
The financial crisis started in the subprime mortgage market before becoming a global economic disaster. Former President Barack Obama responded to the downturn with new financial regulations. Dodd-Frank became the centerpiece of those reforms when it was passed in 2010.
Dodd-Frank was intended to rein in the big banks, which many feared had grown out of control. Speaker Ryan has previously made the point that the reforms have actually helped the big banks grow. He added Friday that the regulations have also stifled small businesses by making it harder to get loans.
“This bill does a lot to grow the economy, but perhaps most importantly it revives the role community banks can play in getting small businesses and new ideas off the ground,” House Majority Leader Kevin McCarthy said Friday. “Since its inception, Dodd-Frank has strangled community banks with red tape and needless compliance costs.”
Ryan highlighted five main areas the new proposal will better handle the financial industry. The proposal is intended to rein in burdensome regulations, make it easier for small businesses to get loans, end bailouts, and reduce the deficit. Ryan reiterated in a tweet Monday that the bill will make the financial sector fairer for small businesses.
Financial Services Committee Chairman Jeb Hensarling introduced the proposal April 26. The bill was able to successfully navigate through committee but on very partisan lines. An earlier version of the bill was introduced in 2015, but it failed to pass.
“The Financial CHOICE Act offers economic opportunity for all and bank bailouts for none,” Hensarling said Friday. “We will unleash America’s economic potential and give Main Street job creators desperately needed help so more Americans can find work, have good careers and give their families a better life.”
Democrats and others on the left have been far less optimistic about the bill. They have expressed concern that the proposal would leave the financial sector unchecked. An inadequately regulated financial sector could, therefore, lead to risky decisions similar to what contributed to the financial crisis.
“The Wrong Choice Act is a deeply misguided measure that would bring harm to consumers, investors and our whole economy,” Rep. Maxine Waters, the ranking Democrat on the House Financial Services Committee, said. “The bill is rotten to the core and incredibly divisive. It’s also dead on arrival in the Senate, and has no chance of becoming law.”
Democratic Sen. Elizabeth Warren argued the bill would let big banks, payday lenders, and financial advisors cheat people without accountability. Rep. Dan Kildee of Michigan echoed the point my noting it would take the country back to a time when policies encouraged risky behavior.
The House is scheduled to hold a hearing to discuss the bill Tuesday evening. The bill will move onto the Senate for consideration if passed by the House.