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From Banking and Finance Law Daily, May 5, 2017

Reactions to Financial CHOICE Act committee passage fall along party lines

By Stephanie K. Mann, J.D.

Following the passage of the Financial CHOICE Act (H.R. 10) out of the Financial Services Committee and onto the full House floor, multiple representatives and trade associations have responded, entirely upon partisan lines (see Banking and Finance Law DailyMay 4, 2017).

Congressional support. According to Rep. Blaine Luetkemeyer (R-Mo), the premise of the bill is to "change the current regulatory paradigm in order to offer a new model that benefits taxpayers, consumers, and our local communities." The bill will protect Americans by replacing "too big to fail" with bankruptcy and "too small to succeed" with common-sense regulatory relief.

Representative Sean Duffy (R-Wis) argues that since passage of the Dodd-Frank Act, "bank fees have gone up, free checking is all but gone, and small community banks have been choked out of existence." H.R. 10 would help to correct these problems, said Duffy. Several of Duffy’s amendments have been incorporated into the bill, including: prohibiting the CFPB from soliciting information on non-public personal information without consumers’ permission; stopping the CFPB's "wasteful" use of taxpayer dollars, and making significant changes to the Securities and Exchange Commission on the registration of proxy advisory firms that prohibit unfair, coercive, and deceptive practices.

"The Dodd-Frank Act continues to crush Americans and community banks with its thousands of pages of regulations. Since the bill passed seven years ago, access to working capital decreased and borrowing costs increased," said Rep. Warren Davidson (R-Ohio). "The Financial CHOICE Act would set America’s economy and financial sector on the right course again. Voting to pass this bill through the Committee was a pleasure, and I look forward to voting for it again on the House floor."

Representative David Kustoff (R-Tenn) stated, "The Financial CHOICE Act will repeal Dodd-Frank’s one-size-fits-all regulations and finally allow small businesses and individuals to access the capital they need to grow and prosper. The legislation will also end tax-payer funded government bailouts of financial institutions and will hold and Washington and Wall Street accountable."

The way to economic growth is through the Financial CHOICE Act, said Rep. French Hill (R-Ark). Relationship-driven, locally focused banks play a primary role in providing loans and access to capital to many consumers and small businesses, which is crucial to economic development of the country, stated Hill.

Congressional opposition. On the other hand, Rep. Joyce Beatty (D-Ohio) believes the bill is the "Wrong CHOICE" for consumers because it allows Wall Street to gamble with Americans’ hard-earned savings and engage in risky behavior. Additionally, Beatty argues that the bill would undermine the Consumer Financial Protection Bureau, which "has returned nearly $12 billion to almost 30 million Americans."

Industry support. According to the American Bankers Association, because of the thousands of pages of the Dodd-Frank Act and the costs associated with complying with the new regulations, many community banks have to choose between meeting those requirements and meeting the financial needs of their customers. The ABA believes that the Financial CHOICE Act will address many of these concerns, including the repeals of the Durbin interchange amendment; the TAILOR Act, which requires that regulations be tailored to fit an institution’s business model and risk profile; and the Qualified Mortgage safe harbor provision for mortgages held in a lender’s portfolio.

“Since Dodd-Frank’s passage, banks have been working diligently to comply with the sometimes onerous and duplicative requests of regulators," says Consumer Bankers Association President and CEO Richard Hunt. The trade association expressed specific appreciation for many provisions, including the reforms to the CFPB; namely, the creation of a five-person, bipartisan commission to govern the bureau.

The Independent Community Bankers of America expressed general support for the bill. However, its statement expressed continued concern about provisions that would alter the 10- percent concentration cap on deposits and liabilities at the largest financial institutions.

The Financial Services Roundtable called passage of H.R. 10 an important first step to improving the regulatory system and promoting economic growth. "Improvements to financial regulations can lead to economic growth, while still protecting taxpayers and consumers," said FSR CEO Tim Pawlenty.

Industry opposition. Calling the bill a "massive insult" to Americans, which will threaten financial stability, open security markets to scam artists while the closing the courthouse door to their victims, eliminate shareholder resolutions, hobble Wall Street regulators, and supercharge Wall Street bonuses, Public Citizen remained steadfast in its opposition. It emphasized that if the "Wrong CHOICE Act" becomes law, fewer safeguards will exist than in 2008, before the Great Recession.

"The so-called Financial Choice Act is actually the Wrong Choice for America's consumers, homeowners, depositors, small investors, taxpayers and our economy itself," said U.S. PIRG. "It leaves the successful CFPB as an unrecognizable husk incapable of policing the marketplace while piling innumerable gifts on to the majority's Wall Street and payday lender patrons who will again run amok if the bill becomes law. They ignore the fact of the 2008 financial collapse at our collective peril."

Companies: American Bankers Association; Consumers Bankers Association; Financial Services Roundtable; Independent Community Bankers of America; Public Citizen; U.S. PIRG

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