WASHINGTON, D.C. – Congressman Brian Fitzpatrick (PA-08), a Certified Public Accountant and member of the Small Business Committee, released the following statement Friday regarding the House passage of the Financial CHOICE Act [H.R. 10]:

“Every American deserves the opportunity of financial independence. Unfortunately, top-down regulations from Washington missed Wall Street and hit Main Street – increasing consumer fees, slowing economic growth and crushing the small community banks crucial to Bucks and Montgomery county families and businesses.

Dodd-Frank promised to end ‘too big to fail,’ but instead gave us ‘too small to succeed.’ Unlike big banks, which can afford an army of lawyers and regulatory experts to navigate the Dodd-Frank loopholes, the community banks and credit unions that empower entrepreneurship and local lending have been squeezed out. Since the enactment of Dodd-Frank, nearly 1,900 banks - many of which were community financial institutions - have vanished, leaving consumers with fewer choices and increased fees.

Wall Street and the big banks don’t like the Financial CHOICE Act – in fact, they fought against the bill, its consumer reforms and increased accountability. But that’s OK, because I work for you, not them.

The truth is: The Financial CHOICE Act is a clear-eyed reform that levels the financial playing field, supports access to capital and credit for all Americans, prevents taxpayer-funded bailouts, and increases penalties for white-collar criminals and accountability for regulators.

Economic growth is a three-piece puzzle: tax reform, balanced budgets, and regulatory reform. The House’s passage of the Financial CHOICE Act shows this Congress is serious about unleashing the American economy. Now it’s crucial to build on this momentum and get to work on bipartisan tax reform."

The Financial CHOICE Act is a victory for taxpayers. The non-partisan Congressional Budget Office reports that the legislation would save taxpayers over $24 billion.

Wall Street firms were the biggest beneficiaries of Dodd-Frank after donating over $30 million to supportive politicians during the bill’s writing in 2010. The Financial CHOICE Act, on the other hand, is far from a “wet kiss for Wall Street” – it’s not supported by Wall Street banks, but instead backed by local banking institutions.

“[C]ommunity banks are the catalysts for economic growth in their communities.  Dodd – Frank has accelerated consolidation, restricted consumer lending and encouraged the end of relationship banking. The CHOICE Act includes important regulatory relief measures that will help community banks to once again provide the vital services communities across the country need to facilitate economic growth,” said Nick DiFrancesco, President/CEO of the Pennsylvania Association of Community Bankers.

Other supportive groups include: the Independent Community Bankers of America, National Federation of Independent Business, American Insurance Association, Consumer Bankers Association, Credit Union National Association, Financial Services Roundtable, Mortgage Bankers Association, National Association of Federally-Insured Credit Unions, Small Business & Entrepreneurship Council, and the United States Chamber of Commerce.

Executive Summary

 

Title I – Ending “Too Big to Fail” and Bank Bailouts

• Repeals the Federal Deposit Insurance Corporation’s (FDIC) orderly liquidation authority (OLA) (Dodd-Frank’s Tile II bailout authority)
• Establishes a new chapter in the bankruptcy code for large, complex financial institutions (identical language passed the House via suspension earlier this Congress)
• Repeals the Financial Stability Oversight Council’s (FSOC) authority to designate non-bank firms as systemically important financial institutions, or SIFIs
• Repeals Title VIII of Dodd-Frank that allows the FSOC to designate financial market utilities (FMUs) as systemically important and grants these FMUs access to the Fed’s discount window and lending facilities
• Prohibits the use of the Exchange Stabilization Fund to bail out firms and/or their creditors
• Repeals the FDIC’s stressed-asset guarantee program
• Brings transparency to the Fed’s “living will” process
• Improves the stress testing process for banks
• Abolishes the Office of Financial Research (OFR)

 

Title II – Demanding Accountability from Wall Street

• Increases the civil penalties for securities laws violations that the Securities and Exchange Commission (SEC) may seek in its enforcement actions
• Give the SEC new authority to impose penalties equal to investor losses in cases involving “fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement”
• Updates the money penalties imposed by the Sarbanes-Oxley Act of 2002
• Updates the civil and criminal money penalties for insider trading violations

 

Title III – Demanding Accountability from Financial Regulators and Devolving Power away from Washington

• Subjects all financial regulators to the REINS Act
• Requires all financial regulators to conduct stringent economic analyses of all proposed and final regulations to ensure that the benefits outweigh the costs
• Repeals the Chevron doctrine with respect to all financial regulators after two years from the date of enactment
• Subjects the FDIC, FHFA, NCUA, OCC and the non-monetary functions of the Fed to the regular appropriations process
• Requires public notice and comment for any international standard-setting agreement
• Directs federal agencies to work in cooperation regarding enforcement actions, to reduce the duplication of efforts
• Imposes criminal penalties for government leaks of regulatory determinations  
• Prevents the federal regulators from directing settlement dollars to third party organizations

 

Title IV – Unleashing Opportunities for Small Businesses, Innovators, and Job Creators by Facilitating Capital Formation

• Includes language of bills that have previously been introduced and/or passed in the House, with a handful of exceptions:
  • “Small Business Mergers, Acquisition, Sales, and Brokerage Simplification Act” – Rep. Huizenga, passed in the House in the 114^th Congress and reintroduced in the 115^th Congress
  • “Encouraging Employee Ownership Act” –  Rep. Hultgren, passed in the House in both 114^th and 115^th Congresses
  • “Small Company Disclosure Simplification Act” – Former Rep. Hurt passed the House in the 114^th Congress
  • “Securities and Exchange Commission Overpayment Credit Act” – Rep. Meeks, introduced in 114^th and 115^th Congresses
  • “Access to Investment Research” – Rep. Hill, passed in the House in both 114^th and 115^th Congresses
  • “Accelerating Access to Capital” – Rep. Wagner, passed the House in the 114^th Congress, expected to be reintroduced in the 115^th Congress
  • “Enhancing the RAISE Act” – expected to be introduced in the 115^th Congress
  • “Small Business Credit Availability Act” – Former Rep. Mulvaney introduced in the 114^th Congress, expected to be reintroduced in the 115^th Congress
  • “Fostering Innovation Act” – Rep. Sinema, passed the House in the 114^th Congress, and reintroduced in the 115^th Congress
  • “Helping Angels Lead our Startups” – Rep. Chabot, passed the House in both the 114^th and the 115^th Congresses
  • “Main Street Growth” – Former Rep. Garrett introduced in the 114^th Congress, expected to be reintroduced in the 115^th Congress
  • “Micro Offering Safe Harbor” – Rep. Emmer, passed in the House in the 114^th Congress, and reintroduced in the 115^th Congress
  • “Private Placement Improvement” – Former Rep. Garrett, passed in the House in the 114^th Congress, expected to be reintroduced in the 115^th Congress
  • “Supporting America’s Innovators Act” – Rep. McHenry, passed in the House in both the 114^th and the 115^th Congresses
  • “Fix Crowdfunding Act” – Rep. McHenry, passed in the House in both the 114^th Congress, enhanced version to be reintroduced in the 115^th Congress
  • “Corporate Governance Reform and Transparency” – Rep. Duffy, introduced in the 114^th Congress, expected to be reintroduced in the 115h Congress
  • “Senior Safe Act” – Rep. Sinema, passed in the House in the 114^th Congress
  • “National Securities Exchange Regulatory Parity” – Rep. Royce, passed in the House in the 114^th Congress, expected to be reintroduced in the 115^th Congress
  • Private Company Flexibility and Growth – expected to be introduced in the 115^th Congress
  • Small Company Capital Formation Enhancements – expected to be introduced in the 115^th Congress
  • Encouraging Public Offerings – expected to be introduced in the 115^th Congress

 

Title V – Regulatory Relief for Main Street and Community Financial Institutions

• Includes language of bills that have previously been introduced and/or passed in the House:
  • “Preserving Access to Manufactured Housing” – Rep. Barr, passed in the 114^th Congress and reintroduced in the 115^th Congress
  • “Mortgage Choice” – Rep. Huizenga, passed in the 114^th Congress and reintroduced in the 115^th Congress
  • “Financial Institution Customer Protection” – Rep. Luetkemeyer, to end the practices of Operation Choke Point, passed in the House in the 114^th Congress
  • “Portfolio Lending and Mortgage Access” – Rep. Barr, passed in the 114^th Congress and reintroduced in the 115^th Congress
  • “Application of the Expedited Funds Availability Act” – Rep. Radewagen, passed in the 114^th Congress and reintroduced in the 115^th Congress
  • “Small Bank Holding Company Policy Statement” – Rep. Love, passed in the 114^th Congress and reintroduced in the 115^th Congress
  • “Community Institution Mortgage Relief” – Rep. Sherman, introduced in the 114^th Congress
  • “Financial Institutions Examination Fairness and Reform” – Rep. Rothfus, introduced in the 115^th Congress
  • “National Credit Union Administration Budget Transparency” – Former Rep. Mulvaney introduced in the 114^th Congress
  • “Taking Account of Institutions With Low Operation Risk” – Rep. Tipton, introduced in the 114^th and the 115^th Congresses
  • “Federal Savings Association Charter” – Rep. Rothfus, introduced in both the 114^th and 115^th Congresses
  • “SAFE Transitional Licensing” – Rep. Stivers, passed in the House in the 114^th Congress
  • “Right to Lend” – Rep. Pittenger, introduced in the 114^th Congress
  • “Community Bank Reporting Relief” – Rep. Hultgren, introduced in the 114^th Congress
  • “Homeowner Information Privacy Protection” – Rep. Hultgren, introduced in both the 114^th and the 115^th Congresses
  • “Home Mortgage Disclosure Adjustment” – Rep. Emmer, introduced in the 114^th Congress
  • “Protecting Consumers’ Access to Credit” – Rep. McHenry, introduced in the 114^th Congress
  • “NCUA Overhead Transparency” – Former Rep. Mulvaney introduced in the 114^th Congress

    

 

Title VI – Regulatory Relief for Strongly Capitalized, Well Managed Banking Organizations

• Provides an off-ramp from the Dodd-Frank supervisory regime and the Basel III capital and liquidity standards for banks that elect to maintain an average leverage ratio of at least 10 percent

 

Title VII – Empowering Americans to Achieve Financial Independence

• Substantially reforms the Consumer Financial Protection Agency (CFPB)
  • Renames the agency the “Consumer Law Enforcement Agency”
  • Restructures the agency as an Executive Branch agency with a single director removable by the President at will
  • Subjects the agency to the regular appropriations process
  • Installs an independent Inspector General; he or she is required to testify semi-annually before Congress
  • Repeals the agency’s supervisory functions
  • Repeals the Unfair, Deceptive, Abusive Acts and Practices (UDAAP) authority of the agency
  • Repeals the authority to restrict consumer arbitration
  • Removes the authority to regulate small-dollar credit
  • Reform indirect auto lending guidance
  • Includes a number of judicial and due process protections for financial companies and/or individuals who are the subject of an enforcement action
  • Provides a process for the agency to publish advisory opinions to financial companies seeking guidance on their conduct or products
  • Addresses inordinate salaries of CFPB officials by placing employees on the General Schedule
• Repeals the Durbin Amendment

 

Title VIII – Capital Market Improvements

• Repeals DOL’s Fiduciary Rule and prohibits the DOL from issuing a similar rule until the SEC does so
• Authorizes the SEC through FY 2022
• SEC reforms
  • Sunsets pilot programs authorized by the SEC for Self-Regulatory Organizations  unless the SEC issues a permanent charter for the program
  • Repeals the SEC Reserve fund
  • Restructures and streamlines various offices
  • Requires the SEC to develop internal risk controls regarding sensitive market data
  • Requires the SEC to obtain a subpoena before it can request source data from a registered entity
  • Requires the SEC to give adequate notice to all persons before an enforcement action can be taken by the commission
  • Provides individuals with additional judicial and due process protections when defending themselves against SEC enforcement actions
  • Creates an advisory committee to provide recommendations to modernize the SEC’s enforcement program
  • Allows Congressional access to PCAOB investigative or inspection materials

• Exempts all asset backed securities, other than those comprised of nonresidential mortgages, from risk retention requirements
• Requires a shareholder vote on executive compensation only when there is a material changes in the compensation
• Prohibits the SEC from requiring proxy solicitations to use a single ballot for director elections
• Expands relief for smaller issuers relief from the internal control evaluations required by Section 404(b) of the Sarbanes-Oxley Act
• Repeals certain provisions of Title IX of the Dodd-Frank Act:
  • Restrictions on securities arbitration
  • Pay Ratio disclosures
  • Corporate governance mandates that are imposed on all public companies
  • Ability of regulators to restrict incentive-based compensation
  • Creating a government board that would assign credit rating agencies the ability to rate structured financial products
  • Subsidies for the funding of the governmental accounting standards board
  • Numerous reports and studies

• Expands the eligibility for individuals to meet the definition of an “accredited investor” consistent with H.R. 2187 passed by the House in the 114^th Congress by Rep. Schweikert
• Repeals three specialized disclosure provisions of Title XV of the Dodd-Frank Act, including the section that requires the SEC to require conflict minerals disclosure for all public companies
• Directs the SEC and CFTC to review its derivatives rules and regulations to resolve inconsistencies, which were issued pursuant to Dodd-Frank Act Title VII
• Exempts swap transaction between affiliated entities from the swap rules issued by the SEC and the CFTC, consistent with Rep. Lucas’ amendment to the Commodity End-User Relief Act passed earlier this Congress

 

Title IX – Repeal of the Volcker Rule and Other Provisions

• Fully repeals the Volcker Rule

 

Title X – Fed Oversight Reform and Modernization

• Similar language to the FORM Act that passed the House in the 114^th Congress
• Imposes limits on the Feds extraordinary lending powers in Section 13(3) of the Federal Reserve Act
• Requires the Fed to generate a monetary policy strategy of its own choosing to provide transparency about the factors leading to its monetary policy decisions
• Requires the Fed to regularly communicate how its policy choices compare to a benchmark rule
• Enhances representation of district bank presidents on the Federal Open Market Committee (FOMC)
• Specifies the full FOMC as the body to set the rate of interest paid on excess reserves
• Directs GAO to conduct an audit of the Fed
• Establishes a “Centennial Monetary Commission” consistent with H.R. 2912, by Rep. Kevin Brady in the 114^th Congress

 

Title XI – Improving Insurance Coordination through an Independent Advocate

• Repeals the Federal Insurance Office
• Creates the Office of the Independent Insurance Advocate (IIA)
  • Establishes the IIA as a voting member of FSOC

Requires the USTR and Treasury to publish, and make available for public comment, any proposed text of a bilateral or multilateral agreement regarding any insurance or reinsurance standards

 

Full bill text HERE