House Votes to Scrap Dodd-Frank Rules

Photo by Castleski / Shutterstock.com

While former FBI Director James Comey was stealing the news limelight with his Capitol Hill testimony Thursday, the House of Representatives quietly voted to undo one of the key pieces of legislation designed to prevent another financial crisis.

The Dodd-Frank Wall Street Reform and Consumer Protection Act — the law signed by former President Barack Obama in 2010 that was designed to prevent a repeat of the 2008 financial crisis — tightened regulations and oversight on the banking industry and led to the creation of the Consumer Financial Protection Bureau.

However, the House passed the GOP-sponsored Financial Choice Act by a vote of 233 to 186. The act would gut key elements of Dodd-Frank. Still, you shouldn’t expect the bill to become law anytime soon, according to the New York Times:

The vote is a significant step for a measure that still faces long odds of becoming law because of the slim majority that Republicans hold in the Senate. Even Wall Street lobbyists and lawyers were pessimistic about the chances of the bill.

Critics of Dodd-Frank have charged that at the very least, the legislation could use a few tweaks. And not all of the naysayers are on the political right.

In February, the Washington Post editorial board wrote that some aspects of Dodd-Frank deserved a second look:

Certain parts of Dodd-Frank, do, indeed, cry out for a fix. The measure may be unduly onerous on smaller banks that pose no real risk to overall financial stability. The Volcker rule, intended to force a clean break between commercial banks and their speculative “proprietary trading” desks, turned into page after page of impenetrable definitions and exceptions.

However, the paper also praised certain aspects of Dodd-Frank. It noted that the legislation had strengthened the nation’s banking system by boosting capital requirements at the largest banks, thereby creating a financial “cushion” should another crisis arise.

Many other critics say dismantling Dodd-Frank would rob the financial system of vital protections. Former Rep. Barney Frank himself — the Massachusetts Democrat who was one of the architects of the legislation that bears his name — has said killing Dodd-Frank could put the entire financial system in danger by allowing banks to take on too much debt and to engage in too many risks. Frank said:

“You would have what led to the 2008 crash. At some point, all of that unrepayable debt causes the system to crash.”

The GOP’s Financial Choice Act rescinds the CFPB’s jurisdiction over payday lenders. It would also give the president the power to fire the heads of the CFPB and the Federal Housing Finance Agency at any time, CNN Money reports. It also would give Congress control over the CFPB’s budget.

Consumer Financial Protection Bureau, a consumer watchdog agency created under Dodd-Frank, and the Federal Housing Finance Agency

A group of 20 attorneys general recently issued a letter to House leaders, urging them to vote against the Financial Choice Act, Consumerist reports.

“A rollback of these significant post-financial crisis rules and regulations would substantially harm consumers and the public in general,” the attorneys general concluded.

What do you think of the GOP’s plan to roll back Obama-era banking regulations and consumer protections? Sound off below or on Facebook.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
7 Surprising Ways Retirees Waste Their Savings

You can make your retirement money last a lot longer by avoiding these costly mistakes

What’s the Difference Between FICO and VantageScore Credit Scores?

There are lots of credit scores out there, but if you’re keeping an eye on your credit, here’s the one to watch.

5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

This Pastime Can Keep Your Brain Sharp as You Age

It’s never too late to benefit from taking up this type of activity.

10 Things You Should Never Buy on Amazon

Just because you can purchase something on Amazon doesn’t mean that you should.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

10 Cars You Are Most Likely to Keep for 15 Years

The cars that owners hold onto the longest have one thing in common, a new study shows.

9 Things You Should Never Leave in a Car

Thinking of leaving these possessions in a car? Prepare for unexpected consequences.

7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

9 Mistakes People Make When Cleaning With Vinegar

Cleaning with vinegar can save you a lot of money, but using it like this can cost you.

13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

10 Things Successful Retirees Do Differently

These habits and characteristics can help put you on the track to success.

Will You Owe Taxes on Last Year’s Stimulus Payments?

It’s the question on everyone’s lips this tax season.

7 Costly Health Problems That Strike After Age 50

As we age, our bodies wear down. Here is how to cut costs associated with some common ailments.

29 Purchases That Can Save You Money Every Day

Sometimes, you’ve got to spend to save.

7 Things I Never Buy at Costco

A bulk buy isn’t always the best buy.

5 Tax Mistakes to Avoid in Retirement

Even great savers can reduce their retirement income by making these mistakes.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.