Republicans launch effort to roll back the Dodd-Frank banking regulations
Rep. Jeb Hensarling on Wednesday launched what is expected to be a protracted fight over easing banking regulations by pointing to who hasn't been supporting his effort: big Wall Street banks.
His legislation, the Financial Choice Act, would ensure that banks could no longer rely on taxpayers for bailouts, he said. “Perhaps that’s why press reports indicate that most Wall Street banks oppose the Financial Choice Act,” Hensarling (R-Tex.) said during a hearing before the House Financial Services Committee.
The bill offers the country’s nearly 6,000 banks a choice: If they want to avoid many of the regulatory burdens imposed during the Obama administration, they must significantly increase their emergency financial cushion. That would be costly for many big banks, which are not likely to choosethat option, industry experts say.
The 2010 banking overhaul law, known as Dodd-Frank, helped big Wall Street banks while imposing regulations on small community banks that did not cause the financial crisis, Hensarling argued. “We were told it would lift our economy, but instead we are stuck in the slowest, weakest, most tepid recovery in the history of the republic,” he said of Dodd-Frank. “We have seen millions who remain unemployed and underemployed and an economy working at roughly half of its potential.”
He said his legislation, dubbed the Financial Choice Act, would unleash the markets by lifting burdensome regulations.
While it is unclear whether any big-bank chief executives have explicitly lobbied against Hensarling's bill, several have said they do not want to see 2010's Dodd-Frank law thrown out. “We have redesigned the way in which large financial institutions in this country function,” and reworking those regulations would add new uncertainty, Morgan Stanley chief executive James Gorman said recently. “I would not start again. That’s a terrifying thought to start again, because what’s going to replace it?”
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