The Financial CHOICE Act: Policy Issues (CRS Report for Congress)
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| Release Date |
Revised Sept. 14, 2016 |
| Report Number |
R44631 |
| Report Type |
Report |
| Authors |
Sean M. Hoskins, David H. Carpenter, Christopher M. Davis, Marc Labonte, Rena S. Miller, Edward V. Murphy, David W. Perkins, Gary Shorter, Baird Webel |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
The Financial CHOICE Act (FCA; H.R. 5983), sponsored by Chairman Jeb Hensarling, was
ordered to be reported by the House Committee on Financial Services on September 13, 2016.
The bill is a wide-ranging proposal with 11 titles that would alter many parts of the financial
regulatory system. Much of the FCA is in response to the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (Dodd-Frank Act; P.L. 111-203), a broad package of regulatory
reform legislation that initiated the largest change to the financial regulatory system since at least
1999. Many of the provisions of the bill would modify or repeal provisions from the Dodd-Frank
Act, although others would address long-standing or more recent issues.
This report highlights major proposals included in the bill but is not a comprehensive summary.
In general, the changes proposed by the FCA can be divided into two categories: (1) changes to
financial policies and regulations and (2) changes to the regulatory structure and rulemaking
process.
Major policy-related changes proposed by the FCA include the following:
Leverage Ratio—allowing a banking organization to choose to be subject to a
higher, 10% leverage ratio in exchange for being exempt from risk-weighted
capital ratios, liquidity requirements, and other regulations.
Regulatory Relief—providing regulatory relief throughout the financial system
to banks, consumers, and capital market participants, including by repealing the
Volcker Rule, Durbin Amendment, and fiduciary rule.
Too Big To Fail—repealing the designation of systemically important financial
institutions and emergency assistance and replacing an option for winding down
systemic institutions with a new chapter in the Bankruptcy Code that is tailored
to financial firms.
The FCA also includes structural and procedural changes that affect the balance between
regulator independence from and accountability to Congress and the judiciary, including
Leadership—modifying the leadership structure of agencies with a single head
to be bipartisan, multimember commissions.
Funding—subjecting regulators that currently set their own budgets to the
traditional congressional appropriations process.
Rulemaking—requiring regulators to perform more detailed cost-benefit
analysis when issuing new rules and to use cost-benefit analysis to review
existing rules, as well as requiring congressional approval for a major rule to
come into effect.
Judicial Review—requiring courts to apply a heightened judicial review
standard for agency actions taken by financial regulators rather than applying
varying levels of deference to the agencies’ interpretations of the law.
Enforcement—increasing the maximum civil penalties that could be assessed for
violations of certain banking and securities laws and restraining certain agency
enforcement powers.
CFPB—renaming the Consumer Financial Protection Bureau as the Consumer
Financial Opportunity Commission and modifying its powers, leadership,
mandate, and funding.
