A House committee on Tuesday took a dangerous step towards incapacitating Dodd-Frank, the reform law passed in the wake of the 2008 financial crisis, by approving a new bill that, as one watchdog put it, contains "an avalanche of deregulatory rubbish that would imperil consumers and the entire financial system."
The legislation (pdf)—introduced by Rep. Jeb Hensarling (R-Texas) and entitled the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs) Act—passed the U.S. House Financial Services Committee by a vote of 30-26. According to the roll call (pdf), every Democrat on the committee opposed the measure and all but one Republican—Rep. Bruce Poliquin of Maine—supported it.
As Common Dreams previously reported, the bill
would roll back a slew of Dodd-Frank regulations; reduce the power of the Consumer Financial Protection Bureau (CFPB) created by [Sen. Elizabeth] Warren; repeal the Volcker Rule that aims to stop banks from making risky bets with taxpayer-backed deposits; and prevent the Financial Stability Oversight Council from labeling insurers and other non-banks as "systemically important financial institutions"—or too big to fail—making them subject to federal constraints.
The legislation passed "after less than two hours of debate because Democrats didn't even attempt to amend it, instead rejecting it out of hand," The Hill reported. "This bill is so bad that it simply cannot be fixed," said Rep. Maxine Waters (Calif.), who dismissed the measure as a "highly partisan, damaging piece of legislation."
Lisa Gilbert, director of Public Citizen's Congress Watch division, described the legislation as "a gift to the Big Banks, that would extend their 'license to steal' and tear down hard-fought banking regulations, some of which have not yet been implemented."
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"Constraining consumer protections is unconscionable," she continued. "Americans still suffering from the economic collapse deserve better; we deserve government watchdogs with teeth."
Notably, the vote came just days after news broke that Wells Fargo employees illegally opened millions of fake accounts to meet corporate sales targets. Connecting that event with the GOP's deregulation scheme, Waters noted, "At a time when we learn about Wells Fargo...thank you for bringing this bill forward so we can shine a light on exactly what you're trying to do in dismantling Dodd-Frank."
Sen. Warren, who previously dubbed the Hensarling bill the "Wet Kiss for Wall Street Act," is one of the lawmakers hoping to investigate the Wells Fargo scandal. In a Monday letter calling for (pdf) the testimony of bank president and CEO John Stumpf, Warren and her colleagues addressed the importance of these regulatory bodies the CHOICE Act seeks to dismantle.
Dodd-Frank, they wrote, "provides the CFPB with the authority to take action against institutions engaged in practices that violate consumer financial laws, including those practices that are unfair, deceptive, or abusive."
The Financial CHOICE Act will be reviewed by a number of other subcommittees before reaching a full House vote. But as Reuters notes, "the bill is not anticipated to receive President Barack Obama's signature if it ever reaches his desk."