Written By: Joel Palmer, Op-Ed Writer
It passed the House along party lines last month. The likelihood it gets through the Senate is dicey at best.
But key parts of the Financial CHOICE Act may be enacted after they were included in the House Appropriations Committee’s Financial Services Subcommittee’s appropriations bill at the end of June.
The 600-page Financial CHOICE Act was created to reform parts of Dodd-Frank and alleviate the regulations the law placed on banks and financial institutions.
According to the American Bankers Association, the bill, which passed the House on June 8, includes:
• A qualified mortgage safe harbor for mortgage loans held in portfolio
• Tailored supervision based on an institution’s risk profile and business model
• Raising the consolidated asset threshold to allow more institutions to be classified as small banks
• Greater flexibility for savings associations
• Relief from various reporting requirements
• Repeal of the Volcker Rule, which prevents banks from making certain types of speculative investments
• Replacing the “too big to fail” provision in Dodd-Frank with a new bankruptcy code designed to accommodate the failure of a large, complex financial institution
The centerpiece of the Financial CHOICE Act is the reform of the Consumer Financial Protection Bureau (CFPB). The agency has been a point of contention in Congress since it was formed as part of Dodd-Frank in 2010. It was created to overhaul financial regulation and to bring transparency to consumers, especially as it relates to mortgages and credit cards.
The agency says it has provided nearly $12 billion in “relief to consumers through enforcement actions.” But its most high-profile action against PHH Corp. brought into question the constitutionally of its structure that has led to a lengthy debate in Congress and the courts.
The Financial CHOICE Act would lead to the following changes in the CFPB:
• Rename the bureau the Consumer Law Enforcement Agency
• Strip the CFPB of its examination powers
• Alter its leadership to a single director that is removable at will by the President
• Subject the bureau to the Congressional appropriations process
The Financial CHOICE Act passed the house on June 8 by a 233 to 186 vote. All but one Republican voted for the bill, and all Democrats voted against it.
“The bill’s passage reflects an important step toward providing meaningful regulatory reform that will help America’s banks better serve their customers and communities,” said ABA President and CEO Rob Nichols.
However, observers said it will be difficult to pass the Senate, where Republicans hold 52 seats, because the bill would likely need 60 votes to avoid a filibuster.
Enter the recent $20 billion appropriations bill for financial services, which passed through the financial services subcommittee on June 28. Though much of the bill highlights changes to IRS oversight and appropriations, the last sentence of the Appropriation Committee’s press release states: “The bill includes a number of provisions within Title IX which reflect language included in H.R. 10, the Financial CHOICE Act, which passed the House on June 8, 2017.”
Financial CHOICE Act provisions inserted into the spending bill include the CFPB reforms, the rollback of the Volcker Rule, and changes to sections of the Truth in Lending Act.
“I’m particularly excited about the financial reforms, which slash harmful regulations, streamline outdated agency processes, and rein in the rogue Consumer Financial Protection Bureau,” said Financial Services Subcommittee Chairman Tom Graves (R-GA).
The spending bill now has to be considered by the full Appropriations Committee.
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.