In a move to loosen Wall Street regulations and ease consumer financial regulatory protections, House Republicans voted on Thursday to replace the 2010 Dodd-Frank Wall Street reform law.

The new law, the Financial CHOICE Act, H.R. 10, would abolish the Dodd-Frank Wall Street Reform and Consumer Protection Act, which would allow the revamping and elimination of many regulations that were implemented by Washington as a result of the 2007-09 financial crisis.

Speaker Paul D. Ryan said on Thursday, “Ultimately the Financial Choice Act is a jobs bill. It is why we were sent here, to look out for the people who work hard and do the right thing.”

The CHOICE Act allows banks to choose between complying with Dodd-Frank or holding onto more capital. The Act restructures the government’s consumer protection agency against credit and lending abuses, the Consumer Financial Protection Bureau (CFPB), and eliminates the Volcker rule that limits trading activities by banks. The bill would also eliminate a rule which requires brokers to act in the best interest of their clients when providing investment advice about retirement.

Here are some of the regulations and things that would change in the mortgage industry under the new law:

* Reorganize the CFPB: The CFPB would no longer be considered an independent agency and have more congressional and presidential oversight. The CFPB would be renamed the Consumer Law Enforcement Agency and the consumer complaint database would no longer be public.

* End FHFA Independence: The Federal Housing Finance Agency (FHFA) who also acts independently would be under Congress oversight and make the FHFA Director removable by the President at will.

* Affiliated Businesses Owned By Lenders: Under current regulations, fees paid to affiliated companies owned by a lender are counted as points and fees. The Choice Act would no longer require lenders to include these fees as points and fees caps or triggers.

The Act was approved by a vote of 233-to-186 after a fierce debate between democrats and republicans. Democrats said the legislation would create another financial crisis by eliminating government oversight on the financial system making it easier to prey on consumers. The bill would essentially unwind one of President Obama’s most significant accomplishments.

President Donald Trump said in a meeting with some of the nation’s top business executives, which included the leaders of major companies like major firms like Walmart and Pepsi “We’re doing a major elimination of the horrendous Dodd-Frank regulations, keeping some, obviously, but getting rid of many,” Trump said in a meeting with top executives during a “Strategic and Policy CEO Discussion.

Trump added, “For the the bankers in the room, they’ll be very happy.”

The Bill’s main author, Financial Services Committee Chairman Jeb Hensarling (R-TX) issued this statement; “Every promise of Dodd-Frank has been broken. Fortunately, there is a better, smarter way.  It’s called the Financial CHOICE Act.  It stands for economic growth for all, but bank bailouts for none.  We will end bank bailouts once and for all.  We will replace bailouts with bankruptcy.  We will replace economic stagnation with a growing, healthy economy,” he said.

“We will make sure there is needed regulatory relief for our small banks and credit unions, because it’s our small banks and credit unions that lend to our small businesses that are the jobs engine of our economy and make sure the American dream is not a pipe dream,” said Chairman Hensarling.

The Independent Community Bankers of America (ICBA) President and CEO Camden R. Fine said,  “ICBA congratulates Chairman Hensarling on House passage of the Financial CHOICE Act, which advances ICBA-advocated community bank regulatory relief to enhance economic and job growth nationwide. This ICBA-supported legislation includes many provisions in ICBA’s pro-growth Plan for Prosperity regulatory relief platform, such as common-sense reforms to burdensome and costly mortgage-lending requirements, relief from excessive and unnecessary call report and data-collection mandates, and greater accountability in the bank exam environment.”

The president and CEO of the American Bankers Association (ABA), Rob Nichols stated, “Today’s House vote is an important step toward making much-needed regulatory reforms that will allow banks to better serve their customers and communities. We applaud Chairman Hensarling and members of the House Financial Services Committee for their continuing efforts to fix financial rules that are holding back the U.S. economy, and doing little to enhance safety and soundness. We look forward to working with lawmakers in the House and Senate as this process moves forward.”

However, the ABA said it was disappointed in one aspect of the bill because it had retained Dodd-Frank limits on debit card fees.

A  coalition of 20 state attorneys general is calling on U.S. House leadership to reject the anti-consumer legislation. In a joint letter sent to congressional leadership, the attorneys general urged the House to oppose the new bill and maintain the CFPB. The letter stated;

The proposed act will eliminate many of the critical consumer protections implemented as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act in the wake of, and in response to, the financial crisis,” the attorneys general wrote. “As the chief consumer protection officers in each of our respective States, we write to call your particular attention to those portions of the act that would effectively eviscerate the role of the Consumer Financial Protection Bureau, the only independent federal agency exclusively focused on consumer financial protection. The undersigned attorneys general support the work of the CFPB and oppose any effort to curtail its authority.”

The letter concluded, “A rollback of these significant post-financial crisis rules and regulations would substantially harm consumers and the public in general.”

The New York Times reported, “It’s a bill that’s so harmful to vast swaths of the American public if it became law,” said Lisa Donner, executive director of Americans for Financial Reform. “It would make it easier for predatory lenders to rip people off. It would make it easier for Wall Street to keep taking $17 billion out of retirees’ pockets by repealing the fiduciary rule. It would make it easier for big Wall Street banks to take the kind of risks in pursuit of short-term gains that go directly to the pockets of the tiny handful of people at the top that led to the financial crisis.”

California Democrat, Nancy Pelosi, proclaimed the legislation was “dastardly.”

Maxine Waters, D-Calif., said, “It’s shameful that Republicans have voted to do the bidding of Wall Street at the expense of Main Street and our economy. They are setting the stage for Wall Street to run amok and cause another financial crisis. I urge my colleagues in the Senate not to move on this deeply harmful bill.”

Senator Elizabeth Warren, the leading Democrat whose work helped create the CFPB is expected to rally against the CHOICE Act.


Erik Sandstrom
LoanSafe's Mortgage Expert
I'm a Senior Loan Officer and LoanSafe mortgage expert. If you need a live rate quote, or need help getting a new mortgage, please call me direct anytime at 619-379-8999.