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The House of Representatives on Thursday approved a bill that would roll back key parts of the Dodd-Frank act aimed at Wall Street and financial industry regulatory reform which was passed in the wake of the mortgage meltdown.
The House voted 233-186 to approve the Financial CHOICE Act. The bill would give banks a choice between complying with Dodd-Frank or holding onto more capital.
Critics also say it would eliminate the independence of the Consumer Financial Protection Bureau created by Dodd-Frank, and greatly reduce its ability to regulate.
The bill must still go to the Senate. The Senate is less motivated to pass a repeal of the financial oversight legislation. Instead, the Senate is more interested in a broad-based bipartisan bill that focuses on economic growth and could include some financial regulation reform, NBC News has reported.
Dodd-Frank was passed in 2010.
President Donald Trump has pledged to repeal the law. In February Trump called Dodd-Frank a "disaster."
In a meeting with business leaders in April, Trump singled out Dodd-Frank as an example of what he called "horrendous" regulations, and pledged to fix it.
"We're going to be doing things that are going to be very good for the banking industry so that the banks can loan money to people that need it," Trump said at the time.
The CHOICE act faces almost no chance of passage in the Senate, CNBC reported.
Sean Tuffy, who oversees global regulatory intelligence for Brown Brothers Harriman, told CNBC that "This is a symbolic victory for the House Republicans."
Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, said "Every promise of Dodd-Frank has been broken." He said the bill will end what he called bank bailouts.
Rep. Maxine Waters, D-California, ranking member of the financial services committee, called the CHOICE Act "one of the worst bills I have seen in my time in Congress" and "a vehicle for Donald Trump's agenda to deregulate and help out Wall Street."
"This bill would create vast harm, and lead us right back to the bad old days," Waters said.
The CHOICE Act passed by the House would mean the Consumer Financial Protection Bureau would be funded and supervised by Congress, as opposed to the independent Federal Reserve. It would also be renamed the Consumer Law Enforcement Agency.
The head of the agency could be fired by the president, and the protection bureau would lose its ability to crack down on practices that are unfair or deceptive but which don’t break existing law.
Proponents of the bill say it brings the agency’s structure into conformity with the Constitution and provides Congressional oversight and accountability.