House GOP Passes Bill Gutting Dodd-Frank

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Jeb Hensarling. Photo: Zach Gibson/Getty Images

With the former FBI director openly calling the president a lawless liar, it would be easy for liberals to forget to save some contempt for the rest of the Republican Party.

Fortunately, the House GOP has offered voters a timely reminder: On Thursday afternoon, Paul Ryan’s caucus passed a bill that would gut Dodd-Frank’s financial reforms, allowing banks to escape regulations that limit their capacity to make risky investments, along with requirements to undergo annual “stress tests.”

The bill would also neuter the Consumer Financial Protection Bureau, stripping the agency of the power to regulate both payday lenders and arbitration clauses that financial institutions use to keep consumers from being able to hold them legally liable for malfeasance in court.

The legislation is the brainchild of Texas congressman Jeb Hensarling. A prolific consumer of finance-industry donations, Hensarling had previously lobbied the president to roll back two Obama-era financial regulations through executive action: one that barred retirement advisers from putting their own financial interests above those of their clients, and another limiting how much interest payday lenders could charge the working poor.

The Choice Act passed on a near-party-line vote. House Democrats’ assessments of the bill were predictably caustic, with Maxine Waters calling it “one of the worst bills I have seen in my time in Congress.”

Even experts on financial regulation who were critical of Dodd-Frank found little to applaud in Hensarling’s bill.

“Dodd-Frank is just overly complex and burdensome. For the purpose of making the financial system safer, you can do a lot more of that with less complex and less burdensome regulation,” Kim Schoenholtz, director of the Center for Global Economy and Business at NYU’s Stern School of Business, told CNBC. “But the Choice Act, while reducing the burden, actually makes the system less safe, and that’s not an attractive choice.”

Happily, this thing is dead on arrival in the Senate — so long as Mitch McConnell doesn’t take the president’s advice and abolish the filibuster for legislation, anyway. Unlike the GOP’s health-care and tax bills, there’s no way to pass regulatory reform through budget reconciliation. So Republicans will need eight Democratic votes to get this into law. And this bill will not get eight Democratic votes.

House GOP Passes Bill Gutting Dodd-Frank