A replacement for the Dodd-Frank Wall Street Reform and Consumer Protection Act was unveiled Tuesday by House Financial Services Committee Chairman Jeb Hensarling, R-Texas.
The Republican legislative proposal that will be introduced later this month would repeal the Volcker rule and reduce capital demands on banks; end taxpayer-funded bailouts and the concept of “too big to fail”; and retroactively repeal the Financial Stability Oversight Council's authority to designate firms as systematically important financial institutions. It also calls for regulatory relief and tougher penalties for financial fraud.
Speaking to the Economic Club of New York, Mr. Hensarling said the proposal would replace Dodd-Frank, which he called “a grave mistake,” and promote economic growth.
Ranking committee member Maxine Waters, D-Calif., denounced the proposal as “a special interest wish list that would deregulate the financial sector to the detriment of consumers and investors.”
J.W. Verret, a senior scholar at the Mercatus Center at George Mason University and former chief economist for the House Financial Services Committee, said the proposal would help make financial markets more resilient by removing the possibility of government bailouts, but the enhanced penalties could exacerbate what he called “regulation by enforcement” that would give regulators more leverage.
Dennis Kelleher, president and CEO of Better Markets, a non-partisan, non-profit organization, called the proposed legislation “a missed opportunity” to propose reforms that would have received bipartisan support.