Vote Explanation for H.R. 10 — Financial CHOICE Act of 2017

The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed in 2010 by President Obama following an era of unchecked, risky financial market abuses that resulted in the worst financial crisis since the Great Depression.

The 2008 Recession destroyed 8.7 million American jobs, wiped out $2.8 trillion in retirement savings, and led to the foreclosure of 15 million homes. It is estimated that during the crisis, the global economy lost $15 trillion, and cost the U.S. economy more than $22 trillion.

Dodd-Frank introduced much-needed safety and accountability measures to the financial marketplace, putting our economy back on track and bringing stability to global financial markets. Since enactment of this legislation, more than $351 billion has been added to the U.S. economy, and the Consumer Financial Protection Bureau, created under the bill, has secured over $12 billion in monetary compensation for consumers from abusive financial practices. Home sales have hit their highest levels in a decade.

In light of what happened to our economy leading up to the 2008 Recession, and the significant economic progress we have made since the passage of Dodd-Frank, it is reprehensible that Republicans would put forward a bill dismantling our financial regulatory system and protecting the interests of Wall Street above working people.

H.R. 10, the Financial CHOICE Act of 2017, guts Dodd-Frank and rolls back many of the stability, accountability, and transparency reforms to our financial system that were put in place following the 2008 financial crisis. It does this by:

  • Repealing the Financial Stability Oversight Council’s (FSOC) authority to designate nonbank financial companies as systemically important and weakening its ability to identify and address new risks before they threaten the stability of our financial system.
  • Barring federal regulators from establishing capital requirements based on operational risk — defined as the risk of loss resulting from human error or other unforeseen problems.
  • Abolishing the Office of Financial Research (OFR), which collects data and conducts research and analysis necessary for the FSOC to take actions that protect the safety of our financial system.
  • Repealing Dodd-Frank’s Orderly Liquidation Authority (OLA), a mechanism for winding down a failing financial company without disrupting the economy. This prevents million-dollar taxpayer bailouts by requiring losses to be recouped from shareholders, bank managers, creditors, and through fees on the mega-banks.

Additionally, H.R. 10 changes the CFPB’s name to the “Consumer Law Enforcement Agency” and eliminates its authority to:

  • Supervise the consumer financial activities of insured banks and credit unions with more than $10 billion in assets.
  • Take regulatory or enforcement actions concerning payday loans or vehicle title loans.
  • Prohibit “unfair, deceptive, or abusive acts and practices” by financial actors.
  • Publish information submitted to its consumer complaint database.
  • Permanently stand up an Office of Servicemember Affairs, which specifically addresses consumer financial challenges affecting servicemembers, veterans, and their families.

The legislation also gives the President the authority to fire the CFPB Director at will, ending the Bureau’s ability to exist as an independent entity.

H.R. 10 repeals the Volcker Rule, which prohibits banks from risky, proprietary trading and restricts investments in hedge funds and private equity by commercial banks and their affiliates. The legislation also repeals the Fiduciary Rule, which redefined and expanded the circumstances in which retirement advice is subject to a legal obligation to put a client’s interest first.

The bill overturns rules and measures that required publicly traded companies to disclose how their CEOs are paid compared to the median compensation of all other employees, and repeals a requirement for regulators to issue a rule barring incentive-based pay that encourages “inappropriate risks” that led to the Wells Fargo scandal last year.

The legislation further limits the ability for shareholders to offer proposals on a company’s annual ballot, which allows shareholders to communicate the boards that represent them. This can include proposals to address board diversity, and most recently, managing risks related to climate change. Previously, shareholders could submit a proposal to their board if they hold at least $2,000 or at least one percent of a company’s stock for one year. Under this bill, shareholders would qualify ONLY IF they hold at least one percent of the company’s stock for three years — for large companies, this could mean billions of dollars.

Lastly, the bill would repeal Dodd-Frank provisions that combat corruption overseas through the disclosure of the use of conflict minerals that often fuel violence in developing countries.

The Financial CHOICE Act is yet another example of politicians looking out for the big banks instead of the middle class. I will always vote against any proposal that puts corporate interests above financial protections for Americans, and for this reason, I voted against H.R. 10.