One Step Forward, Two Steps Back for Dodd-Frank Act Reform?

In a rare bipartisan vote, 16 Democrats and one Independent who caucuses with the Democrats joined with 50 Republicans to pass Senate Bill 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act (Senate Bill). The Senate Bill is the most comprehensive reform to the Dodd-Frank Act that has passed the Senate, although it is more limited in scope than HR 10, better known as the Financial CHOICE Act of 2017, the Dodd-Frank Act reform bill passed by the House of Representatives in June 2017.

There are a number of notable provisions in the Senate Bill.

Although the passage of the Senate Bill is a significant regulatory development and the substance of the Senate Bill has received a good deal of attention, those who have been pushing for changes in the Dodd-Frank Act should not yet pop the champagne corks. The same day the Senate Bill passed, House Financial Services Committee Chairman Jeb Hensarling (R-TX) released a statement that clearly signals that the House is not inclined to pass the Senate Bill as is. Hensarling called the Senate Bill “a package of helpful bipartisan banking bills” and said he “look[s] forward to combining them with our helpful House bipartisan banking bills.” Translation: Some of the provisions in the Financial CHOICE Act of 2017 will have to be added to the Senate Bill before the House will vote on Dodd-Frank Act and financial regulatory reform.

Given that the Financial CHOICE Act of 2017 did not receive a single vote from a Democrat (although there were parts of the bill that received support from Democratic members of the House), adding any of the more controversial provisions from the Financial CHOICE Act to the Senate Bill would make it difficult to attract bipartisan support in the House and retain bipartisan support in the Senate. We are at best guardedly optimistic that the House and Senate can find common ground, especially with the midterm elections occurring later this year.

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National Law Review, Volumess VIII, Number 82