Changes to Dodd-Frank Act made by the Financial CHOICE Act, which was passed in the House earlier this month and now awaits the Senate, could come sooner than expected if a spending bill continues to move through the House.
The bill, which was recently pushed through the House Appropriations Financial Services Subcommittee, contains numerous riders that echo requirements from the Financial CHOICE Act, including limiting the Consumer Financial Protection Bureau’s supervisory authority by limiting what the Bureau can spend its budget money on. It would also roll back the Volcker Rule, which bars banks from using their own accounts to make what could be considered speculative and risky investments that don’t directly benefit the banks’ customers. Sections of the Truth in Lending Act are also amended.
Passing of the spending bill was met with mixed reaction from subcommittee members, and passed on a party-line vote. Representative Tom Graves (R-GA) acknowledged that the bill takes significant power away from the Federal government, which is one of the main goals of the Financial CHOICE Act.
Attaching riders to funding and/or budget legislation is an old, yet controversial, way lawmakers pass legislation that otherwise might not make it through the entire process of becoming a law. Representative Nita Lowey (D-NY) said of the bill, “This bill embodies the worst of the damage [deregulation] would inflict on American families and the worst of a broken and secretive process.”
One such example of the way the bill could loosen regulations on banks would be to reclassify the definition of a small bank holding company by raising the consolidated asset threshold, thereby allowing more institutions to be classified as small banks, and not subject to the same regulations. From the bill:
CHANGES REQUIRED TO SMALL BANK HOLDING COMPANY POLICY STATEMENT ON ASSESSMENT OF FINANCIAL AND MANAGERIAL FACTORS SEC. 919.
(a) IN GENERAL.—Before the end of the 6-month period beginning on the date of the enactment of this Act, the Board of Governors of the Federal Reserve System shall revise the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors (12 CFR part 225—appendix C) to raise the consolidated asset threshold under such policy statement from 23 $1,000,000,000 (as adjusted by Public Law 113–250) to $10,000,000,000.
The next step for the bill is to be considered by the full Appropriations Committee, although no further action has been scheduled. You can read the bill in its entirety here.