House Financial Services Committee Chair Jeb Hensarling (R-TX) unveiled a summary of the "Financial CHOICE Act," a Republican plan to replace the Dodd-Frank Act ("Dodd-Frank"). Congressman Hensarling described the proposed Act as "a market-based, equity-financed Dodd-Frank off-ramp." The "CHOICE" acronym stands for "Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs."
The proposal offers banks and other financial institutions an alternative to the current regulatory regime if they maintain a 10% leverage ratio (among other conditions).
According to the executive summary, the Financial CHOICE Act would achieve the following goals:
- end "too big to fail" and bank bailouts;
- repeal the authority of the Financial Stability Oversight Council to designate firms as systematically important financial institutions;
- repeal Title II of Dodd-Frank and replace it with a new chapter of the Bankruptcy Code;
- repeal Title VIII of Dodd-Frank;
- reform the Consumer Financial Protection Bureau;
- demand regulatory accountability from the SEC and the Board of Governors of the Federal Reserve System and abolish the Office of Financial Research;
- impose enhanced penalties for financial fraud and self-dealing;
- facilitate capital formation by repealing the Volcker Rule and other regulations; and
- incorporate more than two dozen regulatory relief bills for community financial institutions.
Congressman Hensarling noted that the Financial CHOICE Act will be introduced as legislation later in June 2016.
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