Hensarling’s CHOICE Act May Serve as Framework for Trump Strategy on Financial Reform

According to a recent article in the New York Times, many see the Financial Choice act as a likely framework for how the Trump Administration will approach financial reform. The bill’s sponsor, Rep. Jeb Hensarling, Chairman of the House Financial Services Committee, recently fueled this speculation by saying that “there has been a fairly constant dialogue with the Trump transition team about the Choice Act.” The chairman also explained that he is “interested in working on a 2.0 version” of the bill, a step which might provide the Trump policy team the opportunity to take part in shaping the legislation. Rep. Hensarling has also been mentioned by members of the Trump transition team as a possible choice for Treasury Secretary in the new administration. Additionally, the proposed legislation shares a very similar tone with a recent release, outlining Trump’s plans to dismantle the Dodd-Frank act.

The CHOICE Act would make several major changes to existing regulation. Primarily it would allow banks to choose between compliance with Dodd-Frank and operating with higher capital reserves. It would also re-organize the CFPB and limit the Financial Stability Oversight Council’s ability to designate non-banks as “systemically important”.

Despite much optimism, Rep. Hensarling is aware of the challenges faced by his reform effort. During his recent remarks he explained that although Republicans hold majorities in both chambers of Congress, he remains “painfully aware of the Senate’s cloture rules.” This, in part, may contribute to the Chairman’s continued focus on the broader political picture. Yesterday, during a House Financial Services Committee hearing, Chairman Hensarling warned SEC Chairwoman Mary Jo White against last-minute “midnight rulemaking” during the few remaining days of the Obama Administration. The Chairman cautioned that doing so would be “neither conducive to sound policy nor consistent with principles of democratic accountability.”

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