House Republicans vote to roll back major Wall Street regulations enacted after ‘08 crash

Against a unified Democratic Party in the US House, Republicans have passed a bill to undo much of the Dodd-Frank Act of 2010, which further regulated the banking industry in response to the financial crisis of 2007 to 2008.

A largely partisan vote of 233 to 186 advanced House Resolution 10, the Financial Choice Act, to the US Senate on Thursday. The Choice Act repeals key aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Only one Republican voted against the bill, Rep. Walter Jones of North Carolina, who was among just three Republicans to vote for Dodd-Frank in 2010.

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Representative Bill Huizenga (L) and U.S. President Donald Trump © Carlos Barria

The GOP claims the regulatory law prevented a true recovery from the so-called “great recession,” while Democrats counter that its reforms are necessary to prevent another economic calamity.

House Financial Services Committee Chairman Jeb Hensarling (R-Texas), who sponsored the Choice Act, told Bloomberg News that Dodd-Frank imposes more rules “than all the other Obama-era regulations combined.”

“We will replace bailout with bankruptcy,” Hensarling said, adding, “We’ll replace Washington micromanagement with market discipline.”

That may be easier said than done, based on what is widely expected to happen next in the Senate, where 60 votes are needed and there are only 52 Republicans.

Unless the GOP pulls a procedural maneuver known as budget reconciliation, bipartisan compromise is the only way any rollback of Dodd-Frank makes it to President Donald Trump’s desk.

The Consumer Financial Protection Bureau, created by Dodd-Frank, is stripped of any authority under the House GOP proposal. Senate Democrats will likely echo their House counterparts and call it a non-starter for any negotiations across the aisle.

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One World Trade Center tower in New York City. © Mike Segar

“Donald Trump and Republicans want to open the door to another economic catastrophe like the Great Recession and return us to a financial system where reckless and predatory practices harm our communities and families,” said Congresswoman Maxine Waters (D-CA) on Thursday, the Los Angeles Times reported.

Neutering the federal consumer advocate, which has distributed approximately $12 million in financial relief to consumers – and which was involved in the penalization of the big bank Wells Fargo for opening 2.1 million unauthorized accounts – will likely be a sticking political point in the debate.

The consumer bureau not only loses its authority to keep a close eye for compliance of financial firms, but is also barred from creating regulations on payday and car-title loans.

Furthermore, the bureau’s director serves at the pleasure of the president and may be removed anytime, and no independent funding will be allowed, so its budget would be purely up to Congress.

Senate Majority Leader Mitch McConnell (R-Kentucky) has not been optimistic about a Dodd-Frank reversal passing the high chamber. Healthcare and taxes have been the priorities for Republicans.

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U.S. President Donald Trump © Carlos Barria

What the GOP would have to do in order to stave off any need to reach a 60-vote threshold, is just repeat what is currently being done to advance the repeal of Obamacare. Reconciliation, a runaround the normal route for legislation, is the budget process whereby a simple-majority can decide if a provision is burdensome to federal spending.

Republicans could point to the repeal of Dodd-Frank’s bankruptcy alternative known as an orderly-liquidation authority, which would reduce federal deficits by $24.1 billion in 10 years, according to the nonpartisan Congressional Budget Office, or CBO.

Senate Banking Committee Chairman Mike Crapo (R-Idaho), told Bloomberg that he has plans for his own blow to Dodd-Frank, which will include input from Democrats and the White House.

“The Choice Act is a very solid piece of legislation that will also be a part of what we consider,” Crapo said.

Big financial firms favor the House bill’s removal of the retirement account rule, commonly named fiduciary rule, which forces brokers to put customer interest before their own.

But big banks are not fans of the bill raising the minimum percentage on assets they should hold as capital in order to avoid stricter federal oversight. Under the Choice Act, 10 percent of assets must be held, instead of the current 3 percent for most banks and 6 percent for the most important financial institutions.

Via RT. This piece was reprinted by RINF Alternative News with permission or license.