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House Passes Financial Choice Act

Posted on 6/9/2017

Yesterday afternoon, the House passed Financial Services Committee Chairman Jeb Hensarling's (R-TX) Financial CHOICE Act by a nearly party line vote of 233 to 186; with Congressman Cramer supporting passage. The 600-page bill does away with many provisions of the Dodd-Frank Act (DFA) and provides additional targeted regulatory relief for the industry.

A number of NDBA-supported provisions are in the legislation, including a Qualified Mortgage (QM) safe harbor for mortgage loans held in portfolio, more tailored supervision based on an institution's risk profile and business model, greater flexibility for mutual savings associations, and small bank holding company relief. In addition, the legislation includes a so-called "regulatory off-ramp" for larger institutions if those institutions maintain a 10 percent non-risk weighted leverage ratio. The measure also repeals DFA's Orderly Liquidation Authority and creates a new bankruptcy statute to facilitate the failure of a large, complex financial institution.

The CHOICE Act also makes substantial changes to the Consumer Financial Protection Bureau, renaming the agency the Consumer Law Enforcement Agency and stripping its examination powers and "UDAAP" enforcement authority. The agency would be led by a single director removable at will by the president, and subject to the congressional appropriations process.

During House debate on the legislation, several amendments were adopted, including a measure to allow federal mutual savings associations to waive their dividends. That amendment passed on a vote of 235-184 with two Democrats voting in favor and one Republican voting against the measure.

With House passage of the CHOICE Act, the regulatory relief debate now shifts to the Senate, where Senate Banking Committee Chairman Mike Crapo (R-ID) has indicated that he intends to craft his own legislation with input from the Trump Administration and Committee Democrats.

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