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Financial CHOICE Act clears House of Representatives

Thursday, the U.S. House of Representatives passed H.R. 10, the Financial CHOICE Act, on a party-line vote in which only one Republican voted with the Democrats to oppose the bill. No Democrats voted to approve the bill.

The actual vote was 233-186, and all five Oklahoma Representatives voted in favor of the bill. As originally introduced by House Financial Services Committee Chairman Jeb Hensarling (R-Texas), the roughly 600-page bill represents Hensarling's effort to “repeal and replace” Dodd-Frank.   

Included in the CHOICE Act are several provisions your OBA supports:

  • Develop a process to provide more “tailored” supervision of banks by federal banking regulators, based on an institution's risk profile and business model rather than some arbitrary “cap” of $5 billion or $10 billion;
  • Qualified Mortgage safe harbor treatment is provide for mortgage loans originated and retained by the bank;
  • The most controversial provision appears to be the so-called “regulatory off-ramp” for larger institutions if those institutions maintain a 10 percent non-risk weighted leverage ratio.
  • Mandates certain changes to the structure of the Consumer Financial Protection Bureau:
    • Renaming the Agency, the Consumer Law Enforcement Agency;
    • Strips the CFPB's examination authority and eliminates the Bureau's authority to enforce allegations of “UDAAP” violations.
  • 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.

“House leadership stripped out a provision that would have repealed the Durbin Amendment dealing with price controls on interchange fees,” OBA President and Roger Beverage said. “Bankers tried to make the case for greed on the part of big retailers, but to no avail. The fact is the retail constituents outnumbered bankers by about 10-1.”

The bill now moves to the Senate where it will be dramatically changed.  Massachusetts Sen. Elizabeth Warren is the “gatekeeper” for Democrats on the Senate Banking Committee. There are some who support many of the provisions contained in H.R. 10, but the bill itself is likely to be ignored.

“Sen. Warren has said on many, many occasions she supports community bank efforts to get some regulatory relief for these banks and their customers,” Beverage said.  “So far I haven't seen any actions that would reinforce her very early statements and before she was elected to the Senate. I guess we'll just have to wait and see.

“I am encouraged by the fact that there are five Senate Democrats who have either co-introduced or have co-sponsored S. 1102, the CLEAR Relief Act of 2017. If those five Democrats remain committed to community bank regulatory reform, there's a real shot we can get something done yet this year.  We only need three more Democrats, and I'm hoping Senator Warren is one of those three.”

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