Issue: Consumer Protection — Dodd-Frank Repeal
House Republicans voted June 8, 2017, to repeal Dodd-Frank financial regulations. The House approved the Financial Choice Act, which scales back or eliminates many of the post-crisis banking rules. Rep Dan Newhouse (R-WA4) voted for the Act.
Following the financial crisis of 2008, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act to “promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail,’ to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.”
Dodd-Frank called for a host of new regulations and regulatory and watchdog agencies, including the Financial Stability Oversight Council, the Office of Financial Research, and the Bureau of Consumer Financial Protection.
Dodd-Frank also included the so-called Volcker Rule, which prevented government-insured banks from making risky bets with investments. The rule stems from the 1933 Glass-Steagall act, which separated commercial banks from investment banks in order to protect people’s bank accounts from risky investments. It also created the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits. Glass-Steagall was repealed in 1999 under Bill Clinton.
Among other things, the Financial Choice Act:
— repeals the Volcker Rule, which prevents government-insured banks from making risky bets with investments
— deletes a requirement that retirement advisers put their clients' interests ahead of their own
— undercuts the authority of the Consumer Financial Protection Bureau
— exempts payday and car title lenders from any regulation
— eases “stress test rules” designed to ensure bank liquidity