There’s been much speculation surrounding President Trump’s Executive Order calling for the review of Dodd-Frank. This could include anything from amendments to the rule, the elimination of the CFPB, to an outright repeal of the Act. No one really knows for sure exactly what will happen.
One thing we do know is that when the order was signed by the President, Representative, Jeb Hensarling, (R-TX), Chairman of the House Financial Services Committee was right by the President’s side.
Not coincidentally, Representative Hensarling was the one who had previously introduced H.R. 5983, the Financial CHOICE Act (Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs) which was intended to roll back Dodd-Frank. And the plot thickens…
The CHOICE Act was a move by Republicans to replace Dodd-Frank with reforms that would still protect consumers while allowing financial institutions to do what needs to be done to better serve the needs of the consumers.
On this point, Republicans and Democrats disagreed. In addition, former President Obama made it clear that if passed, he would veto the CHOICE Act. Surprise, the Act went nowhere.
So, now Hensarling, and the Republicans get their second bite at the apple. Don’t be surprised if many of the recommendations that come from the Dodd-Frank review under the executive order mirror what was previously suggested under the CHOICE Act.
One reform proposed under the Act was to change the name of the CFPB to “Consumer Financial Opportunity Commission (CFOC) (these guys just love acronyms). Other proposals were to:
- Replace the current single director with a bipartisan, five-member commission which is subject to congressional oversight and appropriations
- Establish an independent, Senate-confirmed Inspector General.
- Require the Commission obtain permission before collecting personally identifiable information on consumers.
- Repeal authority to ban bank products or services it deems “abusive” and its authority to prohibit arbitration.
- Repeal indirect auto lending guidance.
If you’re interested here is a synopsis of the CHOICE Act.
So, as you can clearly see, I believe any changes made to the Dodd-Frank Act, and CFPB will be a matter of CHOICE.