The Choice Act: The Republican Rollback of Dodd-Frank You Need to Know About - By Greer Clem
With all the noise surrounding the Comey testimony yesterday, House Republicans managed to pass a vote to send the Choice Act to the Senate with relatively little public outcry from senior Democrats.
So, what is the Choice Act and why does it matter? The Choice Act is proposed repeal of key aspects of the Dodd-Frank Act passed in 2009 under President Obama. For a run down, see our term profile. It's full name is the Financial Choice Act and it is the brainchild of House Financial Services Committee Chairman Jeb Hensnarling, R-Texas.
The Choice Act, which passed narrowly in the House yesterday (233-186), guts two major authorities produced by the Dodd-Frank act. The first is the Consumer Financial Protection Bureau, a consolidated regulatory agency that oversees the financial sector. Before Dodd-Frank, there were 10 regulatory agencies all supposed to oversee big banks, but since all of them could, none of them really did. The CFPB acts as the regulatory authority over these agencies and ensures that transparency and accountability are being upheld. The Choice Act guts this agency and rolls back its authority, returning regulation to the muddy state it was in pre-crash.
The Choice Act also rolls back the Orderly Liquidation Fund, which was created to help failing banks wind down, rather than to automatically give them government bailouts. Republicans prefer that bankruptcy be allowed to happen because it means they can take greater financial risk. They fail to acknowledge how government bailouts contributed to the financial collapse in 2008, interesting considering the GOP in advocating for deregulation is also advocating the government funds to act as a safeguard against financial failure.
The Act would also repeal the Volcker Rule, which "prevents government-insured banks from making risky bets with investments." So basically, the GOP wants to return things to how they were in 2007: no accountability, no transparency, and greater risks.
This vote will now head to the Senate where it needs 60 votes to pass. The dangers of the Choice Act are obvious even to one who is unfamiliar with the complexities that caused the 2008 financial crisis. All you have to know is that it eliminates transparency and accountability: not what we need removed from our financial institutions, especially with the current American political climate and the changing global landscape.