On June 23, a discussion draft of “The Financial CHOICE Act” was released by the House Financial Services Committee. A primary purpose of this bill is to replace the Dodd-Frank Act, including reforming financial institution regulations and significantly changing the structure and authority of the Consumer Financial Protection Bureau.
Specifically, the CFPB’s leadership would change to a bipartisan, five–person commission, with a name change to the “Consumer Financial Opportunity Commission”, or “CFOC,” to reflect a mission of both consumer protection and maintaining competitive markets. The commission would be required to establish a procedure for issuing written advisory opinions. The CFOC’s regulations would be “subject to the normal congressional appropriations process,” and its “authority to ban bank products or services … deem[ed] ‘abusive’ and … authority to prohibit arbitration” would be repealed, along with its ability to prohibit or limit the use of arbitration agreements. Additionally, the Act would require the CFOC “to verify information in the [Consumer Complaint Database] before it may be released to the general public.” This database has been under scrutiny and, as we reported, it is also the subject of the proposed CFPB Data Accountability Act.
Furthermore, the Financial Choice Act would prohibit the “use of the Exchange Stabilization Fund to bail out financial firms or creditors.” The Act would also incorporate “regulatory relief bills for community financial institutions” such as the Financial Institution Customer Protection Act to end Operation Choke Point, which we previously discussed.
Committee Chairman Jeb Hensarling (R-Tex.) stated in an official press release that “[w]e must instead offer all Americans greater opportunities to raise their standards of living and achieve financial independence by replacing Dodd-Frank with real reforms that work.”
This draft legislation follows a summary that was released by Hensarling last month, which indicated that a series of CFPB reforms would be included. The portions of the discussion draft of the bill addressing proposed reforms to the CFPB can be located in the section of title III entitled “Empowering Americans to Achieve Financial Independence.”
We will continue to follow the progress of this proposed legislation.