House Republicans passed a measure Thursday designed to rein in regulations that were implemented in response to the financial crisis.
The Financial CHOICE Act now moves onto the Senate for consideration. The bill is primarily designed to rollback regulations that were implemented in response to the financial crisis of 2007. Supporters have argued the regulations have become too burdensome and unfair.
Republican Rep. Jeb Hensarling introduced the measure April 26. The bill is intended to end bailouts, reduce financial restrictions, and restructure certain federal agencies. It primarily targets the Dodd-Frank Wall Street Reform Act which was enacted a few years after the collapse.
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“All of the promises from Dodd-Frank were broken,” Hensarling said on the House floor. “They promised us it would lift the economy, Mr. Chairman, but instead we are still stymied in the weakest, slowest recovery in the post-war era. They promised us it would end ‘too big to fail’ but instead it cynically codified ‘too big to fail’ banks into law.”
Former President Barack Obama responded to the financial crisis by imposing new rules and restrictions on the financial sector. Dodd-Frank became the centerpiece of those reforms. It was intended to rein in the big banks, which many feared had grown out of control.
Democrats have warned the Republican counter bill would jeopardize financial sector oversight. They have expressed concern that an inadequately regulated financial sector could lead to risky decisions similar to what contributed to the financial crisis.
“The CHOICE Act would lead our nation in the wrong direction, further skewing our public policies towards the interests of top donors and away from the needs of working families and people of color as a whole,” Demos associate policy director Amy Traub said in a statement prior to the vote. “Demos condemns this bill and urges members of Congress to vote against it.”
The Financial CHOICE Act has garnered support from business groups and free-market advocates. Labor unions and others on the left have been much more critical of the proposal. There has been a debate since the financial crisis over whether the response from the government was the best approach.
The financial crisis started in the subprime mortgage market before becoming a global economic disaster. It turned into an international crisis with the collapse of the investment bank Lehman Brothers in September 2008. The economy has improved significantly since the collapse, but there are still lingering issues.
House Speaker Paul Ryan has previously made the point that the Dodd-Frank reforms have actually helped the big banks grow. He stated last week that the regulations have stifled small businesses by making it harder to get loans. Ryan reiterated in a tweet Monday that the counter bill will help small businesses.