CHOICE Act Markup Drags On After GOP Sinks Dem CFPB Amendments

Rep. Jeb Hensarling's (R-Texas) Financial CHOICE Act could be up for a vote in June. flickr

The House Financial Services Committee on Wednesday killed a handful of Democratic amendments aimed at altering some of the most significant overhauls contained in Chairman Jeb Hensarling’s plan to replace the 2010 Dodd-Frank Act, especially those related to the Consumer Financial Protection Bureau.

The panel voted along party lines to reject one Democratic amendment to the Texas Republican’s Financial CHOICE Act that would have preserved the CFPB’s independent funding stream. The GOP proposal, H.R. 10, would make the CFPB subject to the congressional appropriations process. Another defeated Democratic amendment would have kept the CFPB’s authority to target predatory behavior (Unfair, Deceptive or Abusive Acts or Practices) at financial services companies.

Members of the panel debated those proposals Tuesday night before returning to Capitol Hill Wednesday to hold recorded votes. Since this morning, the panel has been debating amendments on a variety of issues ranging from the Labor Department’s fiduciary rule to monetary policy reforms, but the committee has postponed votes on the new proposals.

The ongoing debate means that the markup will almost certainly carry over into Thursday morning. A GOP committee aide said that Republicans are expecting five to six more amendments from Democrats, and that all recorded votes on outstanding amendments could be held off until Thursday.

The lengthy debates on Democratic amendments made it clear that the currently pending proposals are unlikely to receive the panel’s approval. One amendment, offered by Rep. Stephen Lynch (D-Mass.), would have gotten rid of CHOICE’s repeal of a Labor Department rule that places new fiduciary requirements on retirement investment advisers.

For around two hours, lawmakers re-litigated the effectiveness of the fiduciary rule, which among other provisions established a private right of action if advisers sell certain products in violation of the regulation. Several Republicans reiterated that they would prefer seeing the Securities and Exchange Commission create a best-interest standard, instead of the DOL.

One moderate Democrat, Rep. John Delaney (Md.), said that Republicans who support repealing the rule are underestimating the ability of the financial services industry to innovate and adapt to the new investment climate. Rep. Tom MacArthur (R-N.J.), however, argued that the rule has the potential to make retirement advisers so risk-averse that they will only recommend purchases of U.S. Treasuries.

“It will absolutely put all financial advisers on the defense, including possibly a legal defense,” MacArthur said.

The committee is also slated to vote on an amendment from Rep. Michael Capuano (D-Mass.) that would halt implementation of the CHOICE Act until the completion of an Office Government Ethics review of whether the bill would directly benefit the president or any of his appointees. Capuano called the proposal a “nice, easy amendment” that would address the fact that many former Wall Street executives have high-ranking positions in the Trump administration.

Hensarling shot down the amendment by calling it “political theater.” The real goal of Capuano’s proposal, he said, was to delay implementation of the Dodd-Frank changes. He called it “a simple amendment that can absolutely, enthusiastically be voted down.”

The Democratic side of the debate ended up focusing on allegations that President Donald Trump is conflicted — either because of business interests or because of investigations into his campaign’s connections to Russian entities. Aside from Hensarling’s comments on Capuano’s amendment, Republicans largely avoided addressing the amendment and instead focused on promoting unrelated issues of the CHOICE Act.

Other amendments still pending before the committee include:

  • A proposal from Rep. Ed Perlmutter (D-Colo.) which, similar to Capuano’s amendment, would halt implementation of CHOICE until certification that provisions in the bill would not have a direct benefit for Trump’s creditors.
  • A proposal from Rep. Gwen Moore (D-Wis.) to cut an entire title of the CHOICE Act that would reform congressional oversight of Federal Reserve monetary policy.

Tara Jeffries contributed reporting.

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