Financial CHOICE Act “2.0”: House Financial Services Committee Chairman Releases Revised Financial Regulatory Reform Proposal

Sullivan & Cromwell LLP - April 21, 2017

On April 19, 2017, House Financial Services Committee Chairman Jeb Hensarling (R-TX) released a modified version of the financial regulatory reform legislation that he introduced in the last Congress.  The revised discussion draft, dubbed “CHOICE Act 2.0,” builds on and retains key features of the original CHOICE Act adopted in the Committee last year, including its targeted approach of amending, repealing, or replacing individual provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), rather than repealing it altogether.
In a related press release, Chairman Hensarling stressed that the “ideas and principles” underlying the bill remain unchanged.  There are, however, several key modifications in the revised legislation, including focusing the prerequisite for so-called “off-ramp” regulatory relief solely on maintenance of a 10% leverage capital ratio (eliminating a supervisory ratings component), providing additional relief from and changes to the existing stress-testing regime, removing the FDIC from the Dodd-Frank living will process, taking a different approach in proposed modifications to the CFPB’s governance structure, and putting in place limits and guidelines applicable to the federal financial regulatory agencies’ enforcement, rulemaking, and supervisory authority.

The Financial Services Committee is scheduled to hold a hearing on the revised bill on April 26, and we expect the committee to move to a markup of the legislation in the near future.