May 5 (UPI) -- The House Financial Services Committee approved the repeal of parts of the Dodd-Frank financial reform bill.
In a 34-26 vote along party lines Thursday, the committee passed the Financial Choice Act, a Republican alternative to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The vote followed three days of contentious debate. The bill, authored by committee chairman Rep. Jeb Hensarling, R-Texas, will now go to the House floor for debate and a vote.
The bill would remove regulations Republicans say have stifled economic growth, crushed banks and limited choices under costly rules. It would allow banks to opt out of Dodd-Frank if they hold adequate cash reserves, and it would limit federal stress tests of major banks to every two years instead of annually. The bill would replace Dodd-Frank's Orderly Liquidation Authority with a bankruptcy process to keep the effects of a failing bank from financial markets.
"When Dodd-Frank was passed nearly seven years ago, Americans were promised it would lift the economy. Instead, we've had the slowest and weakest recovery of our lifetime," Hensarling said.
Democrats argued the bill would allow banks to make risky investments like those that triggered the 2008 economic crisis, in which taxpayers were required to rescue some of the country's largest financial institutions. They also argued it would reduce consumer protections. Dodd-Frank required banks to hold more funds in reserve and demonstrate they could continue operations in the event of another financial meltdown.
Maxine Waters, D-Calif., the ranking Democrat on the committee, called the Choice Act "an invitation for another Great Recession or worse."
Republicans rejected several amendments proposed by Democrats to preserve the Orderly Liquidation Act.
Rep. Michael Capuano, D-Mass., called the bill "dead on arrival" if it advances to the Senate.
In February, President Donald Trump signed an executive order calling for a report from the Treasury Department and other regulators to investigate what could be done to eliminate what the Trump administration called the "overreaching" aspects of the Dodd-Frank Act.