Shortly after his inauguration, President Trump pledged that his Administration would “be cutting a lot out of Dodd-Frank.” He then signed an executive order making it the official policy of the Trump administration to regulate the United States financial system in a manner consistent with seven core principles.
Many of those principles closely track the ideas in the Financial CHOICE Act, the bill passed by the House in early June to replace large chunks of Dodd-Frank. The White House has also released an official statement of administration policy noting that:
…the Financial CHOICE Act, reflects the Administration’s Core Principles in several key respects. It aims to eliminate taxpayer bailouts, simplify regulation, hold financial regulators accountable, and foster economic growth by facilitating capital formation.
So the Trump administration and the House are on the same page when it comes to financial regulatory reform. Where is the Senate? That remains to be seen.
Many people assume that President Trump will never get the chance to sign something like the CHOICE Act into law because no Senate Democrats will help their Republican colleagues surpass the 60-vote threshold. Repealing parts of Dodd-Frank is, in fact, not on the Democrats’ to do list. (Interestingly, it is not on the big banks’ list either.)
But Senate Republicans can still pass key sections of the CHOICE Act – perhaps even the entire bill – with only the 52-seat majority they currently hold.
They can do so through the budget reconciliation process.
Senate rules require that budget bill provisions be “germane” to budgeting and avoid increasing the deficit. The CHOICE Act meets those requirements. The nonpartisan Congressional Budget Office (CBO) recently reported that “enacting the legislation would reduce federal deficits by $24.1 billion over the 2017-2027 period.”
Despite this green light from the CBO, the Senate appears to be in no hurry to enact these reforms. That’s unfortunate. These types of reforms would prevent taxpayer-funded bailouts and empower Americans to make independent financial decisions.
Two key reforms in the CHOICE Act would: (1) drastically improve the mission and structure of the Consumer Financial Protection Bureau (CFPB); and, (2) replace Title II of Dodd-Frank, known as orderly liquidation authority (OLA), with a bankruptcy provision. The CBO reports that these two reforms provide most of the budgetary savings in CHOICE.
[Copyright By Norbert Michel ]