By KATIE LESLIE
Washington Bureau firstname.lastname@example.org
WASHINGTON — Declaring that President Barack Obama’s overhaul of Wall Street regulation has failed, Dallas Rep. Jeb Hensarling is set to unveil ambitious legislation this month aimed at dismantling key parts of the 2010 Dodd-Frank Act.
Hensarling, chairman of the House Financial Services Committee and a longtime Dodd-Frank critic, is expected to outline his plan to revamp the consumer protection and regulatory law in a speech to the Economic Club of New York on Tuesday, with the legislation to be filed in coming weeks.
With his Financial Choice Act, the Texas Republican wants to do away with the Volcker rule, which restricts a bank’s ability to make risky speculative investments; increase congressional oversight of independent regulatory agencies; exempt banks with certain capital levels from parts of the law; and slap heftier fines on banks for fraud and other financial misconduct.
The measure has virtually no chance of becoming law during Obama’s final months in office. But it helps Hensarling, a close ally of Speaker Paul Ryan, lay out a policy road map for GOP presumptive nominee Donald Trump, who has pledged to repeal the law if he is elected.
“Dodd-Frank is the absolute epitome of Washington greed — and it is this greed we should fear the most,” Hensarling will say Tuesday, according to an advance copy of his speech.
“When they voted for it, supporters of Dodd-Frank told us it would ‘promote financial stability,’ ‘end too big to fail,’ and ‘lift the economy.’ None of this has come to pass.”
Hensarling, one of seven powerful House committee chairmen from Texas, has tried for years to chip away at the measure, which was passed in the wake of the housing crisis and is aimed at increasing oversight of the nation’s most powerful banks.
But instead of increasing consumer protections designed to stave off another economic meltdown, Hensarling says, Dodd-Frank has increased market volatility by bolstering big banks at the expense of smaller, community-based institutions.
Among the most sweeping changes is language to increase congressional oversight of independent financial regulatory agencies, specifically the Consumer Financial Protection Bureau — which Hensarling calls “the single most powerful and least accountable federal agency” — and the Financial Stability Oversight Council.
Hensarling wants to rename the consumer protection bureau and place it under the control of a bipartisan five-member commission instead of a single director. The Choice Act also proposes establishing an independent, Senate-confirmed inspector general and abolishing the Office of Financial Research.
He’s sure to face Democratic opposition. Just last week, Obama slammed Trump’s anti-Dodd-Frank position and criticized Republican attempts to undo the financial regulation.
“The notion that you would vote for anybody that would now allow them to go back to doing the same stuff that almost broke our economy’s back makes no sense,” Obama said during a speech at an Elkhart, Ind., high school. “I don’t care if you’re a Republican or a Democrat or an independent. Why would you do that?”
Dennis McCuistion, executive director of the Institute for Excellence in Corporate Governance at the University of Texas at Dallas, believes that Dodd-Frank has hurt smaller banks and must be overhauled.
But McCuistion conceded that some critics could view efforts to repeal the Volcker rule, for example, as an overture to deep-pocketed big banks.
“You’re going to have the Elizabeth Warrens of the world who think banks are the worst things,” he said, referring to the Massachusetts senator, who has made Wall Street restrictions a pet cause. “You’ll have people who believe that and who believe that the big banks and Washington, D.C., run this country. I am one of those who happens to believe that, by the way.”
Still, he said he supports the legislation overall and wants it to be vetted by experts in congressional hearings.
“Let’s just get it on the table and see if this is the right thing to do,” McCuistion said.