H.R.10 – Financial CHOICE Act of 2017

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Week ending June 9, 2017

H.R.10 – Financial CHOICE Act of 2017


The bill states its purpose “To create hope and opportunity for investors, consumers, and entrepreneurs by ending bailouts and Too Big to Fail, holding Washington and Wall Street accountable, eliminating red tape to increase access to capital and credit, and repealing the provisions of the Dodd-Frank Act that make America less prosperous, less stable, and less free, and for other purposes.”

Despite the inspiring wordage the bill may not accomplish most of those proposals since, for example the Consumer Financial Protection Board, hated and vilified by opponents of Dodd-Frank, is weakened by the bill through a reduction of its authorities to protect consumers from financial shenanigans and putting it directly in the aim of congressional oversight including how much money is spent to sustain the Board.

To free up capital and so credit the bill believes that the money spent to manage an orderly liquidation of a failed bank is not in the interest of entities who would bear the burden, stockholders.

The bill does increase fines and penalties for Wall Street wrongdoing with the idea that those financiers and organizations will not risk paying such fines and penalties. Those fines ranging from $7500 to $300,000 are essentially doubled. But, at the same time, the bill rolls back the Obama Labor Department rule that requires those not established as fiduciaries to act as so but with little responsibility to the person whose money they are managing.

The Congressional Budget Office explains the basic provisions of the bill this way;

“H.R. 10 would amend the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and other laws governing regulation of the financial industry. The bill also would repeal the Federal Deposit Insurance Corporation’s (FDIC) authority to use the Orderly Liquidation Fund (OLF) and would allow financial institutions, under certain circumstances, to be exempt from a variety of regulations. H.R. 10 would make numerous other changes to the authorities of the agencies that regulate the financial industry, and it would change how the operations of the National Credit Union Administration (NCUA) and Consumer Financial Protection Bureau (CFPB) are funded.”

The bill would first off repeal the Volker Rule that originally aimed to ‘restrict United States banks from making certain kinds of speculative investments that do not benefit their customers.’ The rule specifically addressed commercial banks, where customer deposits were used to trade on the bank’s own accounts. Dodd-Frank as passed provided a number of exceptions including allowing trading on behalf of customers and hedging to mitigate risks.

Another significant change would come under consumer protection as currently handled by the Consumer Financial Protection Board. Under the bill the CFPB would be converted to consumer law enforcement agency that would be subject to appropriations from Congress along with congressional oversight and greater judicial review of its proposals. Currently the CFPB is funded by the Federal Reserve and is free from political meddling by Congress or the White House. The CFPB authority to supervise financial institutions and take action against abusive practices are eliminated or limited by the bill.

 In the areas of insurance regulation, civil penalties for securities laws violations, and community financial institutions the bill makes some revisions.

H.R. 10 give large banks the opportunity to reduce their liquidity to 10% and further reduce their responsibility for risk management and to essentially have enough money on hand.

Dodd-Frank created the Orderly Liquidation Authority (OLA),to help wind down a failing financial institution in a way that does not disrupt the economy.  under Dodd-Frank losses would be handled by shareholders, bank managers, creditors, and fees on large banks.

(Minority View)

Sponsor:  Rep. Hensarling, Jeb [R-TX-5] (Introduced 04/26/2017)

Status: Passed House /



On Passage: On passage Passed by the Yeas and Nays: (Roll no. 299)

House Amendments:

An amendment, offered by Mr. Hensarling, numbered 1 printed in Part B of House Report 115-163 to revise provisions subjecting certain FDIC and NCUA functions to congressional appropriations, relating to appointments of positions created by the Act, and providing congressional access to non-public FSOC information. On agreeing to the Hensarling amendment; Agreed to by recorded vote: (Roll no. 295).

An amendment, offered by Mr. Hollingsworth, numbered 3 printed in Part B of House Report 115-163 to allow closed-end funds that are listed on a national securities exchange, and that meet certain requirements to be considered `well-known seasoned issuers’ or `WKSIs’. On agreeing to the Hollingsworth amendment; Agreed to by recorded vote: (Roll no. 296).

An amendment, offered by Mr. Smucker, numbered 3 printed in Part B of House Report 115-163 to express the sense of Congress that consumer reporting agencies and their subsidiaries should implement stronger multi-factor authentication procedures when providing access to personal information files to more adequately protect consumer information from identity theft. On agreeing to the Smucker amendment; Agreed to by voice vote.

An amendment, offered by Mr. Faso, numbered 4 printed in Part B of House Report 115-163 to allow Mutual Holding Companies (MHCs) to waive the receipt of dividends. On agreeing to the Faso amendment; Agreed to by recorded vote: (Roll no. 297)

An amendment, offered by Ms. McSally, numbered 5 printed in Part B of House Report 115-163 to require the Department of Treasury to submit a report to Congress regarding its efforts to work with Federal bank regulators, financial institutions, and money service businesses to ensure that legitimate financial transactions along the southern border move freely. On agreeing to the McSally amendment; Agreed to by voice vote.

An amendment, offered by Mr. Buck, numbered 6 printed in Part B of House Report 115-163 to require the GSA to study CLEA’s real estate needs due to changes in the Agency’s structure. It then authorizes the GSA to sell the current CLEA building if CLEA’s real estate needs have changed and there is no government department or agency that can utilize the building. On agreeing to the Buck amendment; Agreed to by recorded vote: (Roll no. 298)



Motion to recommit:

Text of the motion:


On Passage:

Procedural Actions:

Senate Amendments:


Cost to the taxpayersCBO estimates that enacting the legislation would reduce federal deficits by $24.1 billion over the 2017-2027 period. Direct spending would be reduced by $30.1 billion, and revenues would be reduced by $5.9 billion. Most of the budgetary savings would come from eliminating the OLF and changing how the CFPB is funded.

CBO also estimates that, over the 2017-2027 period, and assuming appropriation of the necessary amounts, implementing the bill would cost $1.8 billion.

Those estimates are subject to considerable uncertainty, in part because they depend on the probability in any year that a systemically important firm will fail. That probability is small under both current law and under the legislation, but it is hard to predict. Despite those and other uncertainties, CBO has endeavored to develop estimates that are in the middle of the distribution of possible outcomes.

Pay-as-you-go requirements:  Pay-as-you-go procedures apply because enacting the legislation would affect direct spending and revenues.

Regulatory and Other Impact: H.R. 10 contains intergovernmental and private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA). CBO estimates the aggregate costs of the mandates on public entities would fall well below the annual threshold established in UMRA for intergovernmental mandates ($78 million in 2017, adjusted annually for inflation). However, in aggregate, CBO estimates the net cost of the mandates on private entities would exceed the annual threshold established in UMRA for private-sector mandates ($156 million in 2017, adjusted annually for inflation) in 2018 and 2019, primarily because of increases in fees and assessments.

Dynamic Scoring:   CBO estimates that enacting the legislation would not increase net direct spending or on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2028.

Tax Complexity:  Not applicable to this bill.

Earmark Certification:  Data not available

Duplication of programs: Data not available

Direct Rule-Making:  Data not available

Advisory Committee Statement: Data not available

Budget Authority: Data not available

Constitutional Authority:   Assumed.


More Bill Information:



H.R. 10, the “Financial CHOICE Act” (herein called the “Wrong Choice Act”), will eliminate several of the most important aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Wall Street Reform”).

Wall Street Reform effectively addressed failures in the fragmented Federal regulatory scheme that contributed to the worst financial crisis in our country since the Great Depression, which resulted in a loss of about 8 million jobs and reduced the overall wealth of American families by 28.5

percent. Because the law restored responsibility and accountability to our country’s financial system, it boosted confidence among American consumers and helped to stabilize our economy.

Despite the reform law’s successes, Congressional Republicans and President Trump are eager to, in the words of the President, do “a big number” on Wall Street Reform. The Wrong Choice Act is that “big number” to help out large financial institutions on Wall Street at the expense of

consumers, investors, and small businesses located on Main Street. If H.R. 10 becomes law, shoddy financial actors will be free once again to employ unfair, abusive, and deceptive acts and practices that harm vulnerable consumers and engage in excessive risk-taking activities that jeopardize our economy.

Fortunately, Democratic Members do not suffer from the same economic amnesia as their Republican colleagues. Democratic Members still remember the causes that triggered, and the devastating effects of, the 2008 financial crisis and the incalculable stories of human suffering that the unemployment rate skyrocketed to 10 percent; that many young people were unable to secure jobs; and that at least 11million people lost their homes through foreclosures.

Despite Republican Members’ attempts to use “alternative facts” to confuse the American public about the benefits of Wall Street Reform, the numbers tell the true story. Since enactment of the law, our economy has had a record 85 consecutive months of private-sector job growth, creating more

than 16 million jobs. The labor market continues to improve with the unemployment rate now at 4.5 percent and wages on the rise. Business lending by banks has increased by 75 percent, and the banking industry set an all-time record for profits of $171.3 billion in 2016. Community banks’ loan growth has been even faster than at bigger banks, which have supported more

residential, commercial, industrial, and small business loans.

In the face of this evidence that Wall Street Reform is working for consumers, investors, businesses, and the economy, Republican Members are hastily pushing the Wrong Choice Act to advance Trump’s agenda. The Committee, under Chairman Hensarling’s leadership, only intended to hold a single hearing to review his nearly 600-page bill, before rushing to schedule

a markup of it. In contrast, the Committee, Democrats convened 41 hearings relating to regulatory reform matters before Wall Street Reform was considered.

Democratic Members could not let this brazen Republican attempt to jam a bad bill through Congress go unchallenged. Accordingly, Democratic Members exercised their right to compel a second hearing, known as a “Minority Day hearing,” to ensure the American public had an opportunity to hear from

those who are not carrying Trump’s water. At this hearing, 11 experts and community advocates, along with Senator Elizabeth Warren, testified for several hours about the dangers of the bill. Notably absent from this hearing was Chairman Hensarling and virtually all of the Republican Members who largely boycotted it, willfully choosing to ignore the many concerns

raised by these witnesses, and countless letters of opposition from Americans across the country.

Democrats have named the bill the Wrong Choice Act for several reasons. First, it effectively guts the Consumer Financial Protection Bureau (“Consumer Bureau”). It does this by ending the Consumer Bureau’s authority to protect consumers from the unfair, deceptive, or abusive acts or practices of shoddy financial actors, which to date, has helped 29 million consumers receive nearly $12 billion in relief. It eliminates the Consumer Bureau’s supervisory and enforcement authority to oversee the largest financial firms, thereby thwarting the Consumer Bureau’s ability to provide redress to those harmed by Wells Fargo’s fake account scandal. It changes the Consumer Bureau’s independent funding mechanism and instead subjects it to the broken Congressional appropriations process that Republicans have recklessly abused for partisan purposes. It obscures the public’s access to the Consumer Bureau’s nationwide consumer complaint database, even though 97 percent

of complaints submitted to companies have received timely responses. It allows the President to fire the head of the Consumer Bureau without reason. The effect of these provisions is clear. Republican Members want to undermine the Consumer Bureau’s ability to serve as a strong, independent consumer

“cop on the beat.”

Second, the Wrong Choice Act re-creates the problem of regulatory arbitrage by repealing Wall Street Reform safeguards. It creates “off-ramps” for mega-banks to avoid enhanced capital, liquidity, and risk management standards, in exchange for an insufficient leverage requirement of 10 percent, which would encourage large banks to take the same kinds of risks that crashed the economy in 2008. In addition, the Wrong Choice Act repeals the “Volcker Rule,” which stops banks from gambling with taxpayer money. Even President Trump’s Treasury Secretary, Steven Mnuchin, supports the Volcker Rule.

Third, the Wrong Choice Act repeals the emergency, back-up authority of our financial regulators to ensure that very large, complex, and interconnected companies can fail without triggering a global economic financial crisis. This authority, known as the Orderly Liquidation Authority (“OLA”), is replaced in the Wrong Choice Act with superficial changes to

the Bankruptcy Code that fail to address the shortcomings exposed by Lehman Brothers’ chaotic collapse.

Fourth, the Wrong Choice Act makes it harder for our regulators to identify and oversee new risks to our financial system, including risks posed by non-bank entities. Specifically, it repeals the ability of the Financial Stability Oversight Council (“FSOC”) to designate non-bank financial firms, like AIG, as systemically important financial institutions (“SIFIs”) for enhanced supervision and regulation. The Wrong Choice Act also abolishes the Office of Financial Research (“OFR”), which collects data and provides

valuable research and analysis to help the FSOC identify and

combat activities that could risk our country’s economic stability.

Fifth, as discussed above with the Wrong Choice Act’s changes to the funding mechanism of the Consumer Bureau, it hamstrings all of our Federal financial services regulators by imprudently subjecting them to the politicized, annual Congressional appropriations process. It also requires each of these agencies to conduct time-consuming, onerous analysis of

their rules, guidance, and statements in an effort to slow or outright block the issuance of any new protections for consumers, investors, and vulnerable populations. The Wrong Choice Act also provides a two year window for Trump-appointed regulators to rollback guardrails before creating a heightened

litigation standard that makes it easier for industry to block any future effort by regulators to restore or strengthen existing consumer and investor protections.

Sixth, the Wrong Choice Act puts millions of American jobs at risk by curtailing the Federal Reserve’s discretion to consider a wide range of dynamic economic data to determine interest rates and makes monetary policy decisions vulnerable to short-term political pressure. The bill would also establish a partisan Commission with twice as many Republicans as Democrats which would open the door to eliminating the full employment aspect of the Fed’s mandate, and curtailing the Federal Reserve’s ability to support the economy.

Seventh, the Wrong Choice Act hurts investors by silencing shareholders and repealing their fundamental rights as owners of the company, encouraging corporate executives to engage in excessive risk-taking for big bonuses, and letting Wall Street fraudsters of the hook. For example, the Wrong Choice Act makes it harder for the Securities and Exchange Commission (“SEC”) to initiate enforcement actions and eliminates its authority to ban officers and directors from the industry.

Eighth, the Wrong Choice Act hurts seniors and workers saving for retirement by repealing the requirement that financial advisers act in the best interests of their clients. This change bolsters the Trump Administration’s efforts to rollback the Department of Labor’s fiduciary rule, to the benefit of unscrupulous financial advisers but to the detriment

of senior savers.

Finally, the Wrong Choice Act undermines the bipartisan compromises Republican and Democratic Members achieved in bills and laws from the past three congressional terms, thereby removing important investor protections and creating potential loopholes in securities laws.

The Wrong Choice Act is the vehicle to enable President Trump to repeal Wall Street Reform, and it must be defeated at all costs.


Maxine Waters.

Nydia M. Velazquez.

Denny Heck.

Keith Ellison.

Ruben J. Kihuen.

Brad Sherman.

Al Green.

Carolyn B. Maloney.

Michael E. Capuano.

Daniel T. Kildee.

Gregory W. Meeks.

Charlie Crist.

Gwen Moore.

Bill Foster.

Emanuel Cleaver.

James A. Himes.

Juan Vargas.

Stephen F. Lynch.

Vicente Gonzalez.

Joyce Beatty.

Wm. Lacy Clay.

Ed Permutter.




In addition to concurring with the Minority Views, we

strongly oppose provisions in H.R. 10, the “Financial CHOICE

Act” (herein called the “Wrong Choice Act”), that roll back

the rules governing the credit rating agencies.

During the years leading up to the financial crisis, the

credit rating agencies were responsible for providing investors

with assessments of the risks of their securities, but failed

miserably in this task. Specifically, the three main credit

rating agencies–Moody’s Investors Service, Standard & Poor’s

Financial Services, and Fitch Ratings–failed to properly

assess the credit risk in mortgage securities when they

assigned high grades to toxic securities that rapidly


In the aftermath of the financial crisis, the Dodd-Frank

Wall Street Reform and Consumer Protection Act of 2010 imposed

heightened accountability measures on credit rating agencies.

Regrettably, the Wrong Choice Act removes these provisions.

Additionally, the Wrong Choice Act repeals the authority of

the Securities and Exchange Commission under the Wall Street

Reform law to remedy the conflict of interests that still

remain in the credit rating agencies’ business model.

Currently, the agencies are still allowed to be paid and

selected by the issuer of the debt instrument being analyzed

for the grade it receives. As long as this structure is

permissible, the credit rating agencies have an incentive to

cater to issuers’ demands.

For these additional reasons, we strongly oppose H.R. 10.


Stephen F. Lynch.

Maxine Waters.




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