Notwithstanding decidedly hostile testimony last month from this humble columnist,1 the U.S. House of Representatives will soon pass legislation (probably on a strict party line basis) entitled “The Financial CHOICE Act of 2017″ (H.R. 10) (which acronym stands for “Creating Hope and Optimism for Investors, Corporations, and Entrepreneurs”). Despite this cutesy and innocuous title, the CHOICE Act proposes dangerous and radical surgery that would gut those provisions of the Dodd-Frank Act that seek to prevent the failure of a single major bank from setting off a chain reaction that brings down all interconnected banks. Indeed, the Act reads as if it had been drafted by the staff of a libertarian think tank (say, the CATO Institute) after they had all smoked something very strong. Because such libertarian fantasies do not normally race through Congress (so far, anyway), the CHOICE Act’s future in the Senate looks bleak—both because the Senate is a more deliberative body and because its voting rules (unless amended) will require 60 votes for passage.
But that does not mean the CHOICE Act can be safely ignored. Some of its key ideas may well be picked up by the Trump Administration. President Trump issued an Executive Order on Feb. 3, 2017, setting forth “Core Principals for Regulating the United States Financial System” and directing Treasury Secretary Mnuchin to report back on the extent to which existing laws and regulations promote those Core Principles. In this light, the CHOICE Act should be seen more as an attempt to lobby the Treasury Secretary in the hope that those ideas that he backs might get through the Senate. To that end, Republicans on the House Financial Services Committee have just released an elaborate document that is less legislative history than a campaign brief, combining political slogans with policy analysis in an attempt to generate political momentum behind the Act.2
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