In the past couple days, much has been written about the contents of a leaked memo from Jeb Hersarling, Chair of the House Financial Services Committee, to the Committee’s Leadership Team. The memo, of which we have obtained a copy and posted here, outlines proposed changes from the original Financial CHOICE Act, introduced last year. The original version of the Financial CHOICE Act is located here.
According to sources, the current word (for whatever current “word” is worth nowadays) is that the revised draft of the Financial CHOICE Act may come out end of month with a pretty quick mark-up in March. Additionally, some think that if the repeal of the Durbin Amendment (which limits the fees that may be charged to retailers for debit card processing) remains in the bill, then that provision may hold it all up given that opposition doesn’t necessarily divide along party lines, but rather along who has a large bank or retail headquarter in their district.
If desiring to read more about the compensation and corporate governance changes expected in the Act, here is a helpful blog post on the topic by Cydney Posner of Cooley.
Additionally, links to articles of the Financial Choice Act 2.0 can be found below.
- “New GOP Memo Targets Stress Tests, CFPB in Dodd-Frank Changes,” Bloomberg (February 9, 2017)
- “House GOP Plans To Limit Dodd-Frank Outlined In Memo,” Law360 (February 9, 2017)
According to the bill summary:
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- The bill amends the Dodd-Frank Wall Street Reform and Consumer Protection Act, among other Acts, to:
- repeal the Volcker Rule (which restricts banks from making certain speculative investments);
- 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; and
- repeal the Durbin Amendment (which limits the 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.
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- The bill also amends the Consumer Financial Protection Act of 2010 to:
- restructure the Consumer Financial Protection Bureau by replacing its director with a bipartisan commission;
- subject the commission to the congressional appropriations process, expanded judicial review, and additional congressional oversight; and
- limit the commission’s authority to take action against entities for “abusive” practices.
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- In addition, the bill:
- modifies provisions related to the Securities and Exchange Commission’s managerial structure and enforcement authority;
- eliminates the Office of Financial Research within the Department of the Treasury; and
- revises provisions related to capital formation, insurance regulation, civil penalties for securities laws violations, and community financial institutions.
If you have any questions regarding any of the topics covered in this blog post, please feel free to contact a member of our Corporate & Securities practice group or, if applicable, contact your primary Bass, Berry & Sims relationship attorney.