Blog: House Passes Financial Choice Act Of 2017. What Now?

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The Financial Choice Act of 2017 has been passed by the House (almost surreptitiously, given the unwavering focus on the Senate hearing today). According to the WSJ, the House vote was 233 to 186.  The bill, sponsored by Jeb Hensarling, Chair of the House Financial Services Committee, was framed as a Republican proposal to reform the financial regulatory system and relieve business community of the affliction of Dodd-Frank.  The subtitle on the WSJ article tells you how to think about this for now:  “Financial Choice Act is Republicans’ opening bid to loosen regulation; unlikely to become law.” Reuters  also described the approval of the bill as “a move that is expected to die in the Senate,” but relegated the sentiment to the first paragraph.

It’s unlikely to become law, the WSJ observes, because  “it isn’t expected to earn sufficient support to advance in the Senate…. Senators are working on their own regulatory rollback, which they hope to pass with support from at least some Democrats.”  Reportedly,  the Democrats decided against offering any amendments to the bill because they viewed it as “fatally flawed.” Apparently,  the approach of the Senate Banking Committee is to advance separate legislation that addresses Dodd-Frank in a more piecemeal fashion that might garner some Democratic support, with the result, presumably, that some of the more controversial provisions of the Financial Choice Act would be less likely to advance. However, according to the article, “Republicans and Democrats in the Senate so far have only been able to agree on relatively minor changes to Dodd-Frank. Mr. Hensarling said he is looking for ways to push pieces of the plan through the Senate without Democratic support by attaching some measure to the annual budget bill, which passes on a majority vote.”

In addition to taking aim at much of Dodd-Frank, among other things, the bill places a heavier burden on regulators and proxy advisory firms generally, eliminates a lot of studies and repeals or eases a number of regulations. While the vast majority of provisions in the draft bill relate to the banking provisions of Dodd-Frank and the Consumer Financial Protection Bureau, some are related to new requirements for agency rulemaking, capital formation, executive compensation and corporate governance matters, and other matters of interest, such as conflict minerals reporting. Selected provisions are summarized in this PubCo post. If adopted, the bill could also dramatically curtail the use of the shareholder proposal process. (See this PubCo post.)

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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