While all eye were on James COmey and the Senate today, the House GOP quietly passed legislation to end the Dodd-Frank legislation that was passed after the financial crisis, in an effort to...cause another financial crisis, I guess.
The Republican-led House on Thursday voted to free Wall Street from many of the constraints put in place after the 2008 financial crisis, the opening salvo in what is likely to be a protracted battle over deregulation of the powerful banking industry.
Big banks, from Goldman Sachs to Bank of America, would face less scrutiny, and other large financial institutions, such as insurance giant MetLife, could escape tougher rules altogether under the legislation approved largely along party lines.
The Trump administration backed the bill, the Financial Choice Act, as part of a multi-pronged effort to ease banking regulations to spur economic growth. The legislation probably will face stiff resistance in the Senate but it provides a road map of sorts for the policies the president plans to put in place as he appoints new regulators. Trump, who has complained about tight lending practices, has ordered three reviews of banking rules, the first of which Treasury Secretary Steven Mnuchin is set to deliver as soon as next week.
Democrats and progressive groups, who argue that banks need more oversight, not less, are preparing to use the issue to animate supporters still angry that Wall Street banks have not paid a larger price for the financial crisis. They noted that banks reported record profits last year, despite tough Dodd-Frank Act rules, and Wall Street bonuses rose for the first time in three years.
The Financial Choice Act would basically eliminate Dodd-Frank oversight and return us to the era where banks could do whatever they wanted as long as they had enough surplus cash. Of course, since the Big Casino games the banks were playing last decade were all about banks colluding to drain the system dry and then force the government to bail them out because they would bring down the global financial structure without a huge taxpayer bailout, the extra surplus really doesn't matter, it's a billion-dollar fig leaf for a trillion-dollar problem.
But the real aim is to sink the CFPB.
The legislation takes the biggest hammer to the Consumer Financial Protection Bureau, authorized by the Dodd-Frank Act. The agency has toughened mortgage rules and fined big banks for allegedly taking advantage of consumers, but it has run afoul of Republicans who say it has gone too far, contributing to an environment in which consumers are having more difficulty getting mortgages and credit cards.
Hensarling's bill would strip the agency of some of its most important powers. It would no longer be able to write major rules regulating consumer financial companies, such as debt collectors, without getting approval from Congress. The agency would lose some of its independence because its director would serve at the pleasure of the president. And it would also no longer be able to levy hefty fines against financial institutions for "unfair" or "deceptive" practices. The CFPB used those powers to fine Wells Fargo $100 million last year for opening up to 2 million accounts customers did not ask for or know about.
That part of the legislation has drawn particular ire from Democrats and consumer groups.
"This bill is a vehicle for Donald Trump's agenda to deregulate and help out Wall Street," Rep. Maxine Waters, D-Calif., the ranking Democrat on the Financial Services Committee, said on the House floor.
The legislation is not likely to pass intact in the Senate, where it would need to garner some Democratic support. But that has not calmed fears among all of the legislation's critics.
The Republican logic here is that banks are still being corrupt assholes, so that the legislation has failed and must be revoked. It's a lot like saying arsonists still exist, so we have to disband your local fire department, the bums.
Still, the Senate Dems might be able to stop it. We'll see. But right now they have Mitch's stealth Trumpcare bill to deal with, and he's making sure that can pass with just 50 votes.