President-elect Donald Trump appears to be embracing a plan put forth this past summer by Jeb Hensarling, the Republican chair of the U.S. House Financial Services Committee, that aims to weaken the Dodd-Frank law, reported Reuters.
According to the report, language posted on the Trump transition website having to do with financial services sounds similar to the Hensarling bill, dubbed the CHOICE Act.
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On the Trump transition site, Dodd-Frank is criticized as being a “sprawling and complex piece of legislation that has unleashed hundreds of new rules and several new bureaucratic agencies,” reported Reuters. The act calls for Dodd-Frank to be dismantled and promises to replace it with new polices that supposedly encourage growth in the economy and new jobs. The CHOICE Act, which got approved by Hensarling’s committee in September, also calls for Dodd-Frank to be replaced.
“The CHOICE Act accurately reflects the priorities that President Trump has placed on the Dodd-Frank problem,” said J.W. Verret, an associate professor at the George Mason University Antonin Scalia Law School and financial regulation expert, in an interview with Reuters. “I think it is a great blueprint for everything that he has promised.” Verret is a former Republican congressional staffer, noted the report.
Under the Hensarling act and potentially under Trump, banks would get the choice of either complying with Dodd-Frank or having tougher capital requirements so that they keep a ratio of equity to leverage exposure of 10 percent, noted Reuters. What’s more, it would overhaul the Consumer Financial Protection Bureau, get rid of the Volcker Rule — which prevents banks from getting involved in speculative investments — and would also get rid of the Financial Stability Oversight Council’s ability to classify nonbanks as “systemically important.” With the revamped proposal, taxpayer dollars would not be used to bail out banks and financial institutions that are close to going under.
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