Changes to Watch for in CHOICE Act 2.0

According to a recent article in the American Banker, the office of Rep. Jeb Hensarling, Chairman of the House Financial Services Committee, appears to have released a memo to the Committee's leadership, detailing planned updates to the Financial CHOICE Act. As reported by the American Banker, the greatest changes to the bill reflected in the memo include greater incentives for banks to use the regulatory "off ramp" that would be created, a reduction in the authority of the CFPB, revisions in how stress tests are performed, and a narrowing of the FDIC's regulatory scope.

The piece highlights new exemptions from "stress tests and a requirement to provide 'living will' deregulatory plans to regulators" as reasons that banks may be more inclined to use the off ramp which the CHOICE Act would create. As included in the original version of the bill, introduced last year during the 114th Congress, the off ramp would allow financial institutions to comply with fewer regulations in exchange for holding a greater amount of capital.

According to the article, the memo also details updates to the CHOICE Act which would take significantly greater steps to reduce the authority of the CFPB. As reported, outlined changes would "repeal all direct supervisory authority for the bureau" and remove the consumer complaint database.

Another key set of updates that the American Banker touches on are changes in how the Federal Reserve Board (FRB) administers stress tests. These include curbs to the FRB's authority to limit dividend disbursements by banks as well as limits to its ability to place other conditions on banks.

SFIG strongly believes in the need for revisions to Dodd-Frank which incorporate a broad range of viewpoints of market participants. We will engage with members across all asset classes to drive constructive reform.

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