The likeliest vehicle for starting the reform conversation is the proposed Financial Choice Act bill introduced in June by House Financial Services Committee Chairman Jeb Hensarling, R-Texas.
Mr. Hensarling is an outspoken critic of Dodd-Frank who believes the law has strangled smaller banks and stunted economic growth in the U.S.
His plan, which will be reintroduced in the new 115th Congress early in 2017, 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 systemically important financial institutions. It also comes with tougher penalties for financial fraud.
Members of the Council of Institutional Investors are concerned Mr. Hensarling's bill would undo several corporate governance gains, including repealing all types of proxy access, reducing or limiting the frequency of say-on-pay votes and situations requiring clawbacks, and restricting proxy advisory firms' ability to inform institutional investors.
The Choice Act “reflects a lot of economic evidence about the costs of Dodd-Frank,” said J.W. Verret, who notes that “a lot of intellectual firepower (for change) has developed over the last six years.” Still, he said, “We've never had a situation where a previous (banking bill) was entirely replaced. The history of banking law is a patchwork and it will continue to be a patchwork,” said Mr. Verret, senior affiliated scholar with the Mercatus Center at George Mason University and former chief economist for the House Financial Services Committee from 2013 through 2015.