The Financial CHOICE Act of 2017 Signals the Administration’s Staunch De-Regulatory Philosophy

On Thursday, June 8, 2017, the House of Representatives took a significant step toward a substantial repeal of the Dodd-Frank Wall Street Reform and Consumer Protection Act. By a vote of 233 to 168, the House passed the Financial CHOICE Act (the “Act”) and sent a clear message that the issue of financial regulatory reform is not going away anytime soon, regardless of the bill’s upcoming success or failure at the Senate.

A few highlights of the Act include the reformation of the Dodd-Frank created Consumer Financial Protection Bureau. The new “Consumer Financial Opportunity Commission’s” dual focus proposes to be consumer protection and competitive markets. The CFPB’s single director would also be replaced with a five-member commission that is subject to congressional oversight and appropriations.

Significantly, the Act has the potential to reduce Dodd-Frank oversight authority by exempting some banks from regulatory restrictions built to restrain certain financial-sector risks. The Act may also make changes to the current law’s orderly liquidation authority. The Act also requires that certain banks submit to an annual “stress test” to determine whether and how they might react to a financial turndown.

Also on the chopping block is the Department of Labor’s fiduciary rule, parts of which went into effect on June 9, 2017 and requires financial advisors to act in the best financial interests of their clients in any matter related to retirement. In the same breath, however, the Act requires more accountability in the form of increased penalties for fraud and self-dealing.

Notably, it was announced in May 2017 that efforts to include the repeal of the Durbin amendment would be dropped. The Durbin Amendment limits the amount banks may charge to retailers for debit card fees, and it will remain part of the Act.

The MWH Team will continue to monitor this piece of legislation, and the impact it may have on our financial institutions clients, as it makes its way through Congress.

This article is a publication of MWH Law Group LLP and is intended to provide general information regarding legal issues and developments to our clients and other friends. It should not be construed as legal advice or a legal opinion on any specific facts or situations. For further information on your own situation, we encourage you to contact the author of the article or any other member of the firm.