A top House Republican on Tuesday unveiled a plan to replace the Dodd-Frank financial regulatory law, which has been criticized as burdensome by Republican lawmakers, Wall Street executives and industry officials.
Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, called the 2010 law "a grave mistake foisted upon the American people."
He outlined a plan that would repeal or loosen a number of Dodd-Frank regulations in order "to offer all Americans opportunities to raise their standards of living and achieve financial independence."
A provision would reduce the power of the new Consumer Financial Protection Bureau and allow banks to increase the amount of capital they hold to avoid stricter regulatory oversight.
"Simply put, Dodd-Frank has failed," Hensarling said in a speech to the Economic Club of New York. "It's time for a new legislative paradigm in banking and capital markets."
The new legislation has little chance of passing Congress this year. And President Barack Obama would likely veto any bill rolling back Dodd-Frank, which he considers one of his administration's accomplishments.
Obama last week criticized continued Republican attempts to amend or replace the law.
"How it is that somebody could propose that we weaken regulations on Wall Street?" Obama said in a speech in Indiana. "Because of their reckless behavior, you got hurt."
Hensarling's plan is one of at least two GOP proposals. Donald Trump, the presumptive Republican presidential nominee, said last month that he was drawing up plans that would "be close to dismantling Dodd-Frank."
Dodd-Frank passed Congress with almost no Republican support after the 2008 financial crisis. The three Arkansans who voted in favor of the law -- Rep. Vic Snyder and Sens. Blanche Lincoln and Mark Pryor, all Democrats -- are no longer in office.
The law toughened regulations on banks and other financial firms, set up a panel of regulators to watch for signs of instability, and created a new consumer bureau, which has authority to oversee credit cards, mortgages and other financial products.
Republicans have been trying to scale back the law since taking control of the House in 2011.
Hensarling's proposal, called Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs, incorporates several bills that have passed the House but were never signed into law.
Hensarling said Tuesday that the crisis wasn't caused by lack of regulation but by "dumb regulation."
"When they voted for it, supporters of Dodd-Frank told us it would 'promote financial stability,' 'end too big to fail,' and 'lift the economy.' None of this has come to pass," he said.
Hensarling said his plan would address all those issues.
Banks could avoid tougher regulatory oversight if they held capital that was at least 10 percent of their assets. The current requirement is 3 percent for most banks and 6 percent for institutions considered systemically important.
Hensarling stressed that the plan, unlike some other proposals, doesn't force any bank to raise capital. But if they choose to raise capital, he said, banks would be safer and avoid "Dodd-Frank's suffocating regulatory complexity and control."
To end the problem of financial institutions considered too big to fail, Hensarling would create a new section of the bankruptcy code to wind them down.
That would replace Dodd-Frank's orderly liquidation authority, which allows regulators to seize and shut down a major financial firm on the brink of failure. Republicans have called that power a type of bailout.
Hensarling also targeted the new consumer bureau, which he and other Republicans have criticized as too powerful and unaccountable to Congress because its funding comes directly from the Federal Reserve.
The plan would rename the agency the Consumer Financial Opportunity Commission. The single director would be replaced with a bipartisan, five-member commission, and the agency's funding would be subject to congressional appropriations.
Consumer groups, which strongly support the bureau, have said such changes would weaken its authority and allow opponents to starve it of funding.
Hensarling also would take away the authority of the Financial Stability Oversight Council, a panel of regulators created by Dodd-Frank, to designate any firms as systemically important. The designation subjects the firms to stricter regulatory oversight.
And his plan would repeal the Volcker Rule, named for former Federal Reserve Chairman Paul Volcker, which prohibits banks from trading for their own profit and limits their ownership of investments such as venture capital and hedge funds.
Business on 06/08/2016