Without any Democrats’ support, House Republicans passed the Financial Choice Act on Thursday.
The House of Representatives bill seeks to undo the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act in an effort to support small banks.
Congressman Steve Knight (R-Palmdale) was one of the 233 Republicans to vote in favor of the bill, with all but Rep. Walter Jones (R-North Carolina) voting with the party.
“The Financial Choice Act is a long-awaited replacement to the burdensome Dodd-Frank law, which created more rules and restrictions than all other legislation from the past eight years combined,” Knight said in a statement.
According to Knight and other Republicans in favor of the new bill, Dodd-Frank, one of President Barack Obama’s famed reforms, was harmful to economic growth and job creation.
Knight cited that the Congressional Budget Office indicated the new act would save $24.1 billion over 10 years.
The Republican bill would take away the consumer bureau’s ability to monitor financial firms to ensure they are following laws, a key part of Dodd-Frank, the Los Angeles Times reported.
Also, the bill would prohibit banks ensured by the federal government from iffy trading and would create the Consumer Financial Protection Bureau.
The Dodd-Frank was passed as a consumer protection act in mid-2010 in response to the financial crisis – known as The Great Recession – which led to 165 failed financial institutions. Smaller banks, however, claimed the regulations required were too burdensome for their size.
The newly passed Republican bill would also get rid of trading restrictions under the Volcker Rule and would strengthen provisions in cases of bankruptcy to protect taxpayers. It would also repeal a Labor Department regulation that puts client interests ahead of investment brokers’.
“Dodd-Frank regulations masqueraded as being friendly to consumers and businesses, when in reality, this could not have been farther from the truth,” Knight said. “These regulations strangled the growth of our community and local banks and credit unions which, in turn, were unable to keep credit available for families and small businesses to create new jobs and opportunities.”
One bank closed each day under Dodd-Frank, Knight said. Choice, which stands for “Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs,” is an effort to provide regulatory relief for capital markets, according to Knight’s office.
“The Financial Choice Act will allow small businesses to grow by expanding vital access to capital,” the congressman said.
Support for The Financial Choice Act comes from community banks, credit unions, taxpayer protection advocates and veteran’s groups, according to Knight.
To become law, the bill will have to be passed in the Senate.
Bryan Caforio, one of three Democrats running for Knight’s seat in the 2018 Congressional race, released a statement in opposition of the Republican bill.
“The American people know the greed and abuses of Wall Street all too well, and the bill Republicans in Congress passed today and that Knight voted for is yet another example of Washington politicians rigging the rules for corporate executives at the expense of American families,” Caforio said.
The Democrat described his own experience working with banks and said the bill favors the interests of politicians.
“I’ve spent my career taking on the big banks and other financial institutions that take advantage of the people they are supposed to serve,” Caforio said. “I’ve seen firsthand a system that is stacked against middle-class Americans because career politicians have written the rules in favor of their corporate special interests.”
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