Lawmakers in the U.S. House of Representatives are considering a bill that would repeal some federal financial restrictions enacted six years ago in response to the 2008 financial crisis.
In September, House Resolution 5983—titled the “Financial Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs (CHOICE) Act”—was referred to the House Subcommittee on Commodity Exchanges, Energy, and Credit for consideration. The committee on Commodity Exchanges, Energy, and Credit is a subcommittee of the House Agriculture Committee.
If approved by both houses of Congress and signed into law, the bill, proposed by Rep. Jeb Hensarling (R-TX), would remove some of the financial restrictions enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, commonly referred to as “Dodd-Frank.”
More ‘CHOICE’ at the Bank
J.W. Verret, a senior economics scholar at the Mercatus Center at George Mason University, says the CHOICE Act would remove Dodd-Frank provisions that directly harm everyday consumers.
“The bill includes rolling back something in Dodd-Frank called the ‘Durbin Amendment,’ which was a price control on debit card fees,” Verret said. “What we know about price ceilings and artificial price controls is that they restrict supply. One of the things that’s happened as a result of this Durbin Amendment is banks, in order to make up for the fees they lose on the debit cards, have rolled back and eliminated most free checking accounts, which used to be very prevalent before Dodd-Frank.”
Reining in Government Bureaucracy
Verret says the bill will make the Consumer Financial Protection Bureau (CFPB), a government regulatory agency created by Dodd-Frank to enforce new financial laws and regulations, accountable to taxpayers.
“One thing this bill will do to the CFPB is make it more like other government agencies,” Verret said. “Most government agencies are accountable to the American people and the American people’s representatives in the Congress, by having the money they spend be appropriated by Congress. … Well, not the CFPB. This bill just says they have to act like every other government agency: [They must] come to Congress and get their money approved before they spend it.”
Setting Clear Rules
Robert Genetski, a leading economic and financial advisor, says lawmakers should claw back rulemaking power from unaccountable government agencies such as CFPB.
“From my perspective, I believe laws are much more efficient and much less expensive than setting up regulatory bodies to go and make their own laws,” Genetski said. “I just think it’s bad governance. If you don’t want financial institutions to do whatever you think is damaging, you create a law and you put in the law what the penalties are, and then everyone knows what they can’t do and what they can do.”