House leader proposes sweeping reform of Dodd-Frank

June 7, 2016 – Reform of the Dodd-Frank financial regulatory overhaul legislation – featuring, among other things, changing the CFPB’s leadership to a five-member board and subjecting the bureau’s budget to the congressional appropriations process, as well as subjecting other regulators to the congressional appropriations process -- was unveiled today by the top House Republican with oversight of the nation’s financial system.

House Financial Services Committee Chairman Jeb Hensarling (TX) told the Economic Club of New York in a speech that his reform plan – the “Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs” or CHOICE Act – would be introduced as legislation later this month.

Among the highlights of the proposal (as listed on an Executive Summary posted on the Financial Services Committee website today):


  • Change the agency’s name to “Consumer Financial Opportunity Commission (CFOC),” and its mission to both consumer protection and competitive markets, with a cost-benefit analysis of rules performed by an Office of Economic Analysis.
  • Replace the single director with a bipartisan, five-member commission subject to congressional oversight and appropriations.
  • Repeal authority to ban bank products the bureau considers “abusive” and its authority to prohibit arbitration.
  • Repeal indirect auto lending guidance.


  • Make all financial regulatory agencies subject to the “Regulations From the Executive in Need of Scrutiny” Act of 2015 (known as the REINS Act), which would require any executive branch rule or regulation with an annual economic impact of $100 million or more — designated by the White House's Office of Management and Budget (OMB) as a “major rule” -- to come before Congress for an up-or-down vote before being enacted.
  • Further make all financial regulatory agencies subject to bi-partisan commissions, and place the agencies on the appropriations process “so that Congress can exercise proper oversight" (exception: Fed monetary policy).
  • Impose an across-the-board requirement that all financial regulators conduct a detailed cost-benefit analysis of all proposed regulations.

The proposal incorporates more than two dozen regulatory relief bills already pending in Congress for community financial institutions, including:

  • H.R. 1941 – “Financial Institutions Examination Fairness and Reform Act” (requires a federal financial institutions regulatory agency to make a final examination report to a financial institution within 60 days of the exit interview, prescribes examination standards for financial institutions, and other provisions).
  • H.R. 2896 – “Taking Account of Institutions with Low Operational Risk Act” (the TAILOR Act, wich requires federal regulators, including NCUA, to take into consideration the risk profile and business models of institutions subject to regulatory action).
  • H.R. 1210 – “Portfolio Lending and Mortgage Access Act” (which broadens the definition of qualified mortgages under CFPB’s qualified mortgage rule).
  • H.R. 766 – “Financial Institution Customer Protection Act” (which is designed to prevent federal regulators from encouraging banking institutions to close any entity’s bank account without due process).

The plan also includes the repeal of “federal price controls” in the Durbin amendment and calls for an 18-month exam cycle.

Onlookers are giving the proposal little chance of making headway in this Congress (given the relatively short period left, and the upcoming elections). However, the proposal is expected to shape the House Republican agenda in the next Congress. Additional details of the plan are not expected until later this month.


Executive summary/Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs (CHOICE Act)