Replacing Dodd-Frank

CFPB spelled out with Scrabble game pieces

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Financial CHOICE Act of 2017 to tweak Consumer Financial Protection Bureau

The Financial CHOICE Act of 2017, the alternative to the Dodd-Frank Wall Street Reform and Consumer Protection Act, is now one step closer to becoming a reality.

There’s been much talk about repealing the Dodd-Frank and “gutting the Consumer Financial Protection Bureau (CFPB)”. An alternative to Dodd-Frank was crafted last year, given the name Financial CHOICE Act, and stalled in the House of Representatives after clearing out of the House Financial Services Committee. The act was touted as a “pro-consumer”, “pro-growth” Dodd-Frank alternative that would make big tweaks to the CFPB, eliminate the “too-big-to-fail” bank bailouts and lighten the regulatory load on certain financial institutions.

The bill’s sponsor, Jeb Hensarling, R-TX came back with the 2.0, now dubbed The Financial CHOICE Act of 2017. This newer incarnation would bring major changes not only to the CFPB, but to the Office of the Comptroller of the Currency, the Federal Housing Finance Agency, the National Credit Union Administration and Federal Deposit Insurance Corp as well.

One of the biggest changes, is that under the bill:

  • The CFPB director could be fired at will, rather than for cause only, as it is now.
  • It would eliminate the CFPB’s supervisory authority. It would become an enforcement agency only, having the power to enforce “enumerated consumer protection laws only,” without any UDAP (Unfair, Deceptive or Abusive Acts and Practices) authority.
  • The CFPB’s consumer complaint database would no longer be published

Hensarling said, “We want economic opportunity for all, bailouts for none. We want real consumer protections that will give you more choices. Our solution grows the economy from Main Street up, creates more opportunities for working families to get ahead, and levels the playing field with no more Wall Street bailouts.”

While the Financial CHOICE Act of 2017 lightens the regulatory load on Wall Street, how would it affect the “main street” consumer?

“Consumers should not get too freaked out in the short term,” said David Reiss, a professor of law at the Brooklyn Law School. “The rollback is not going to happen overnight and we don’t yet know how far it will go. Consumers should focus on the fundamentals — what are their short- and medium-term goals and how can they best achieve them.”

Consumers, whether they are homebuyers or homeowners, should focus on common-sense items such as educating themselves on how mortgages work and analyzing if the mortgage is best for them in the long-term.

The credit card industry could be impacted the most by a repeal of Dodd-Frank as it rolled back practices such as fees for late payments or when the credit limit was exceeded and better disclosures and restrictions on marketing cards to those under 21.

Ben Woolsey, president of said, “If the regulatory pendulum once again swings in favor of lenders, consumers’ best defense will be to exercise greater personal responsibility and be consistently mindful to live within the strict guidelines of their account agreements.”

Read the complete 593-page discussion draft of the Financial CHOICE Act of 2017 here



HousingWire.  Get ready: Congress fires up Dodd-Frank, CFPB overhaul

TheStreet. What Would a Repeal of Dodd-Frank Mean to Consumers?




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