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The Financial Choice Act, a Republican-designed bill that delivers on the long-held promise to dismantle major parts of the Dodd-Frank financial reform law passed in 2010, including gutting the successful Consumer Financial Protection Bureau (CFPB), won passage Thursday along a nearly party line vote, 233-186.

House Financial Services Chairman Jeb Hensarling said, “Every promise of Dodd-Frank has been broken. We will replace economic stagnation with a growing healthy economy.”

On a call Friday morning with reporters, three opponents of the bill detailed how it will harm consumers in Ohio and across the nation.

Wrong Choice

U.S. Rep. Joyce Beatty, D-OH-3, a Member of the House Financial Services Committee, renamed the bill the “Wrong Choice” bill, arguing the bill will “put consumers, investors and the entire financial system at risk.”

Beatty, whose district lies in central Ohio, spouted performance facts focused on a key target of Hensarling’s caucus, the Consumer Financial Protection Bureau, led by former Ohio Attorney General Richard Cordray.

The agency promotes itself as “a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly.”

Included in its list of accomplishments, some of which Beatty noted on the call, is $11.8 billion in relief to consumers from enforcement actions, 29 million and more consumers received relief from the bureau’s actions, and 1.1 million-plus consumer complaints handled with 97 percent of consumers receiving timely replies from companies who received those complaints.

Beatty said she anticipates the bill will be “dead on arrival” in the U.S. Senate, where CFPB advocates like Ohio senior U.S. Sen. Sherrod Brown will do their best to kill it or reform it so much that it won’t resemble the House bill passed yesterday.

Beatty said that at least 200 groups came forward to oppose the bill.

“We have to stand up for American people,” she said, joining two other speakers in criticizing the bill for eliminating protections put in place to prevent the predatory mortgage lending practices that led to the housing crisis.

Brian Simmonds Marshall, policy counsel for Americans for Financial Reform, said the bill will prevent regulators from doing their jobs by creating “a system built to fail.” Marshall noted that GOP-backed bill will eliminate supervisory examinations of banks by CFPB along with stopping efforts to counter defective, abusive and unfair acts and practices.

Enforcement actions will now be split among multiple regulators, which he said will become a “three-legged race” to enforce appropriate laws. Payday lenders, whose storefronts in Ohio outnumber the total of all Wendy’s, McDonald’s and Burger Kings, will again be free to harm consumers. Under the bill passed, the CFPB will become the only bank regulator that reports directly to White House.

Kalitha Williams, policy liaison for Policy Matters Ohio, a progressive economic think-tank based in Cleveland, said the bill will become harmful to the financially vulnerable.

She noted that the most expensive payday loans in the nation can be found in Ohio, where interests rates can balloon to almost 800 percent. Williams said that about a half-billion dollars are “drained from Ohioans in fees paid to payday lenders,” making them more profitable than ever before.”

What does the “Financial Choice Bill” actually do? Read the changes:

  • Repeal Volcker Rule restrictions on certain speculative investments by banks;
  • With respect to winding down failing banks, eliminate the Federal Deposit Insurance Corporation’s orderly liquidation authority and establish new provisions regarding financial institution bankruptcy;
  • Repeals Durbin Amendment limitations on fees that may be charged to retailers for debit card processing;
  • Certain banks may exempt themselves from specified regulatory standards if they maintain a certain ratio of capital to total assets and meet other specified requirements.

The bill removes the Financial Stability Oversight Council’s authority to designate non-bank financial institutions and financial market utilities as “systemically important” (also known as “too big to fail”).

Under current law, entities so designated are subject to additional regulatory restrictions. Designations made previously are retroactively repealed.

The bill also amends the Consumer Financial Protection Act of 2010 to:

  • Convert the Consumer Financial Protection Bureau into a consumer law enforcement agency;
  • Subject the agency to the congressional appropriations process, expanded judicial review, and additional congressional oversight;
  • Eliminate supervisory authority over financial institutions;
  • Limit the agency’s authority to take action against entities for abusive practices.
  • Modify provisions related to the Securities and Exchange Commission’s managerial structure and enforcement authority;
  • Eliminate the Office of Financial Research within the U.S. Department of the Treasury; and revise provisions related to capital formation, insurance regulation, civil penalties for securities laws violations, and community financial institutions.