United States: House Financial Services Committee Releases Revised "Financial CHOICE Act"

Republicans on the House Financial Services Committee, led by Chairman Jeb Hensarling (R-TX), released the text of their revised "Financial CHOICE Act" (FCA) legislation1 on April 19. The draft bill represents the House Republicans' opening position in the coming debate on financial regulatory reform, and updates the legislation reported out of the Committee in September 2016. The bill would make major, comprehensive changes to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (DFA), as well as other financial regulatory laws. A committee hearing on the bill is scheduled for Wednesday, April 26, and it is likely that Republicans will try to push the bill through the Committee and onto the House floor in the coming weeks.

Not yet clear is how this effort will be coordinated—if at all—with the Trump Administration, as the Treasury Department is in the process of completing a study on financial regulatory reform, expected to be issued in early June, pursuant to an executive order signed by President Trump in February. Furthermore, while we anticipate that the House of Representatives will pass some version of the FCA in 2017, prospects in the Senate are much less clear. The Senate is more likely to pursue regulatory reform legislation that is more limited in scope than the FCA. Also, the Senate being the Senate, such action probably will not be seen until 2018.


In general, while the FCA is not a wholesale repeal of Dodd-Frank, it repeals several of its major provisions, and dramatically revises or restructures many others. The bill also includes a number of GOP priorities that are separate from Dodd-Frank. Some of the main provisions of the 593-page bill are highlighted below.

Changes to SIFI Program (Titles I, II, and VIII of DFA)

The FCA would dramatically curtail the processes established under DFA for the designation, regulation and, when necessary, receivership of systemically important financial institutions (SIFIs) and systemically important financial market utilities (SIFMUs). The FCA would:

  • repeal FSOC authority to designate non-bank SIFIs (DFA § 113, FCA § 151);
  • substantially repeal Federal Reserve authority over non-bank financial companies (DFA §§ 161, 162, 164, 166-168, 170, 172; FCA § 151);
  • limit Federal Reserve remediation, examination, and enforcement authorities over bank holding companies with total consolidated assets of $50 billion or more (DFA §§ 166, 168, 172; FCA § 151);
  • limit Federal Reserve authority to require additional operational risk capital (FCA § 152);
  • repeal FSOC authority to designate SIFMUs (DFA Title VIII, FCA § 141);
  • provide relief from DFA § 165 enhanced supervision and prudential rules for qualifying banking organizations with 10% average leverage ratios (FCA § 602);
  • repeal FDIC receiverships of nonbank SIFIs (DFA Title II, "Orderly Liquidation Authority") and replace with new Bankruptcy Act provisions involving SEC and banking agencies in process (FCA §§ 111, 121-123) (similar Bankruptcy Code amendment introduced in Judiciary Committee); and
  • further restrict Federal Reserve and Treasury bail-out authority (DFA §§ 1104-1106, FCA §§ 131-133).

Repeal Other DFA Provisions

The FCA would repeal other DFA provisions, including the:

  • Volcker Rule (DFA § 619, FCA § 901);
  • Durbin Amendment cap on debit card fees and other restrictions on debit card processing for merchants (DFA § 1075, FCA § 735);
  • authority for SEC and CFPB to restrict arbitration clauses (DFA §§ 921, 1028; FCA §§ 738, 857); and
  • restrictions on conflicts of interest in securitizations (DFA § 621, FCA § 901).

Other Major DFA Changes

The FCA would make several other substantial changes to key DFA provisions, including:

  • easing regulation of mortgage lending (FCA §§ 501, 502, 506, 516, 531, 556, 571, 576);
  • eliminating the CFPB's supervision authority over banks and nonbanks and making potentially significant changes to CFPB's enforcement authority
    (DFA §§ 1024-1026; FCA § 727);
  • eliminating the CFPB's authority to regulate payday or similar loans and rolling back its indirect auto lending guidance (DFA §§ 1022, 1024, 1027; FCA §§ 733-734);
  • limiting the credit risk retention rule to residential mortgage-backed securities (FCA § 842);
  • changing the program for credit rating agency regulation (FCA §§ 850-857);
  • broadening Investment Company Act and Advisers Act exemptions for regulation of private funds and their managers (FCA §§ 471, 858, 859);
  • stress-testing and resolution plan simplification (DFA § 165(d), (i); FCA §§ 151(b), (c));
  • providing regulatory relief for community banks (FCA Title V);
  • creating optional charter authority for federal savings associations (FCA § 551);
  • providing regulatory relief for low-risk banks (FCA § 546);
  • providing regulatory relief for strongly capitalized banks (FCA Title VI);
  • providing relief from the single counterparty credit limit for qualifying banks (DFA § 165(e), FCA § 602(a)(8));
  • making revisions to derivatives regulation (DFA Title VII, FCA §§ 871-872) (separate House legislation addresses swaps end-user relief and non-profit relief); and
  • eliminating the CFPB's UDAAP powers and clarifying the federal banking agencies' UDAP responsibilities under the FTC Act (FCA §§ 736-737).

Other Repeals

The FCA would address other issues not related to DFA. The FCA would:

  • repeal the Department of Labor's fiduciary rule (FCA § 841);
  • reverse Madden decision by codifying valid-when-made principle (FCA § 581); and
  • impose requirements on international regulatory coordination (DFA § 175, FCA §§ 151, 371).

Agency Structural Changes

The FCA would make changes to the structure and operations of financial regulatory agencies:

  • CFPB (FCA Title VII);
  • SEC (FCA Title VIII);
  • Federal Reserve (FCA Title X);
  • FDIC (FCA § 351);
  • Federal Housing Finance Authority (FCA § 352);
  • eliminate the Office of Financial Research (DFA Title I, Subtitle B; FCA § 151); and
  • merge the Federal Insurance Office (FIO) with the FSOC Independent Member (FCA Title XI).

JOBS Act 2.0 (FCA Title IV)

The FCA would make changes to federal securities laws intended to ease access to capital for businesses, including:

  • amendments to streamline securities offering requirements and reporting requirements for issuers; and
  • enhanced crowdfunding provisions.

Other SEC Changes

The FCA would also increase penalties the SEC can impose:

  • enforcement penalties (FCA Title II).

Administrative Law Changes

The FCA would also dramatically alter the process for consideration and review of agency rulemakings through:

  • more cost-benefit analysis (FCA §§ 311-321);
  • Chevron judicial deference rollback (FCA § 341);
  • Congressional review (FCA §§ 331-337);
  • unfunded mandates reform (FCA §§ 381-388); and
  • appropriations process coverage (FCA §§ 361-365).


When Chairman Hensarling put forth an earlier version of the FCA last year, the intention was to set the table for 2017 by defining the parameters of the financial regulatory reform debate in the event that Republicans retained control of Congress and captured the White House. With the election indeed producing that result, the prospects for enactment of such reform improved significantly, and the Committee has thus worked to produce an updated bill that will serve as the primary legislative vehicle for financial reform.

As with most legislative efforts during the 115th Congress, the true test of a bill's prospects will be in the Senate, where a narrower Republican majority combined with minority-friendly procedural rules give the Democrats a greater ability to obstruct or at least delay action. We expect many if not most Democratic Senators will fight attempts that they believe will weaken Dodd-Frank at both the committee level and on the Senate floor. Senate Banking Committee Chairman Mike Crapo (R-ID), well aware of these hurdles, has indicated an intention to craft legislation more slowly and deliberately, with the intention of producing a package that will have some degree of bipartisan consensus.

It therefore remains to be seen how much of the FCA might survive into a final bill, and indeed whether the effort might stall as a whole. Chairman Hensarling is aware that some compromises will be necessary for the effort to ultimately succeed, and there may come a point at which Hensarling must decide whether such compromise is a price he wants to pay for a legislative victory. In the meantime, it is clear that Hensarling intends the FCA to be his starting position in what he hopes will ultimately be bicameral negotiations.


1. "CHOICE" in the bill's title is an acronym for "Create Hope and Opportunity for Investors, Consumers, and Entrepreneurs."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.