Republicans have been trying to chip away at the Dodd-Frank Wall Street Reform and Consumer Protection Act ever since it was passed nearly six years ago, and they have been making some headway in the last month.
The latest victory for the GOP in their fight against Dodd-Frank came in the House of Representatives recently when H.R. 3340, known as the Financial Stability Oversight Council (FSOC) Reform Act, passed by a vote of 239 to 179. The bill was introduced by Rep. Tom Emmer (R-Minnesota) in July 2015 and it passed in the House Financial Services Committee in November.
The FSOC, which was created by Dodd-Frank in 2010 along with the Office of Financial Research (OFR), has the power to designate certain financial institutions as “systemically important,” which increases the regulatory burdens for those institutions. H.R. 3340 amends the Financial Stability Act of 2010 and requires the budgets of both the FSOC and the OFR subject to the annual appropriations process; it also establishes requirements for reports and a public notice and comment period.
“I am a firm believer in a transparent and accountable government, and if a federal institution is failing to meet these fundamental criteria, Congress needs to fix it,” Emmer said. “Unfortunately, FSOC and OFR currently operate in the shadows, outside of the usual congressional oversight and the democratic process. I cannot stand by while businesses that had nothing to do with the 2008 financial crisis are being unjustly burdened with new regulations that result in Americans paying higher prices for essential financial products like home mortgages, as well as education, auto and business loans.”
“I am a firm believer in a transparent and accountable government, and if a federal institution is failing to meet these fundamental criteria, Congress needs to fix it.”
Rep. Tom Emmer (R-Minnesota)
Emmer continued, “Over the years, Congress has given much of its authority to unelected bureaucrats but this legislation returns the Constitutional ‘power of the purse’ back to Congress. Not only will this legislation reduce mandatory spending by $1.3 billion over the next ten years, but it will make FSOC and OFR transparent and accountable to the American people. Subjecting these entities to the congressional appropriations process, enhancing OFR quarterly reporting requirements and allowing Americans to weigh in on OFR rules and regulations gives Congress the tools it needs to provide the proper oversight of FSOC and OFR.”
H.R. 3340, like most proposed legislation that involves financial reform that rolls back Dodd-Frank, passed with an almost exclusively partisan vote. Out of the 239 yeas, only one Democrat voted in favor of it (Rep. Henry Cuellar from Texas), and out of the 179 nays, only one Republican voted against it (Rep. Walter Jones of North Carolina).
The passage of H.R. 3340 in the House is the latest in a series of setbacks for Dodd-Frank. Last week, the House Financial Services Committee passed a bill to repeal Dodd-Frank’s bailout fund for large, complex financial institutions. At the same time, the Committee passed a bill to put the CFPB’s spending on a budget in an attempt to make the Bureau more accountable to taxpayers.
In late March, a judge dealt a blow to Dodd-Frank and the FSOC when she ordered the “systemically important” designation to be removed from insurance provider MetLife. The FSOC designated MetLife as a nonbank systemically important institution in December 2014 and MetLife had fought to have it removed since.