Week ahead: House to vote on Dodd-Frank overhaul

The House will vote in the coming week on a sweeping bill to scale back much of the Dodd-Frank Wall Street Reform Act, the expansive banking regulations passed under former President Barack Obama after the financial crisis.

House Majority Leader Kevin McCarthy (R-Calif.) announced Friday that the chamber would vote on the Financial CHOICE Act after returning from Memorial Day recess.

The CHOICE Act is an effort to undo much of Dodd-Frank, a law long panned by Republicans as a burden on the U.S. economy and businesses. The bill, sponsored by House Financial Services Committee Chairman Jeb Hensarling (R-Texas), passed that panel earlier this month with unanimous Republican support and unified Democratic opposition.

{mosads}Hensarling’s bill would allow banks to opt out of Dodd-Frank if they hold enough cash, and it would limit federal stress tests of major banks to every two years. The bill would remove the power through which the federal government can label a bank “too big to fail,” and take it apart before a collapse.

The CHOICE Act is almost certain to pass the full House along party lines after GOP leaders reached a deal to scrap a provision that would have repealed a controversial cap on fees charged to retailers by credit card companies.

Democrats, who’ve long defended Dodd-Frank from Republican efforts to roll it back, are expected to oppose the bill unanimously.

And the bill is likely dead on arrival in the Senate, where lawmakers on the Banking Committee have shown more interest in a smaller bill focused on community bank relief than the House’s sweeping changes.

The Treasury Department is also expected to release its first report reviewing major portions of Dodd-Frank by Friday. The reports are mandated by two executive memoranda signed by Trump in April.

One directed Treasury Secretary Steven Mnuchin to assess the Financial Stability Oversight Council’s (FSOC) process of designating banks and financial firms “too big to fail.”

FSOC, a multiagency group established in Dodd-Frank, monitors financial risks and designates certain banks and financial firms as “systemically important financial institutions” (SIFIs). That label subjects banks to tougher federal oversight, and Republicans claim the designation is applied inconsistently and arbitrarily.

The other memorandum directs Mnuchin to review and report back on whether the federal government’s orderly liquidation authority (OLA) is useful or hurtful to the U.S. economy and in line with financial regulatory policy.

Established in Dodd-Frank, OLA is the process through which the federal government would help SIFI-designated institutions sell off their assets without triggering an economic crisis.

Though OLA is funded through fees paid by large banks and financial firms, Republicans call it a “bailout” for big banks and seek to replace it with a new bankruptcy process. Democrats generally support it as a safeguard against another financial crisis.

Your week ahead:

Tuesday:

• House Rules Committee: Hearing on the Financial CHOICE Act, 5 p.m. http://bit.ly/2qJ9OAO.

Wednesday:

• House Budget Committee: Hearing entitled “The Economic and Fiscal Benefits of Pro-Growth Policies,” 10 a.m. http://bit.ly/2qJa6HU.
• House Financial Services Committee: Hearing entitled “Flood Insurance Reform: A Taxpayer’s Perspective,” 10:30 a.m. http://bit.ly/2qJ6wgS.

Thursday:

• House Agriculture Committee: Hearing on the Commodity Futures Trading Commission budget with Acting Chairman J. Christopher Giancarlo, 10 a.m. http://bit.ly/2qJglLB.
• House Financial Services Subcommittee on Terrorism and Illicit Finance: Hearing entitled “Virtual Currency: Financial Innovation and National Security Implications,” 10 a.m. http://bit.ly/2qJuFne.
• House Energy and Commerce Committee: Hearing entitled” Improving Consumer’s Financial Options With FinTech,” 10 a.m. http://bit.ly/2qJ3jO7.

Today’s stories:

• Cohn denies interest in replacing Yellen at Fed, by Sylvan Lane
• House to vote next week on bill rolling back Dodd-Frank, by Sylvan Lane
• Cohn says ‘clean’ debt ceiling bill might not be possible, by Niv Elis
• Unemployment rate hits 16-year low as just 138K jobs added, by Vicki Needham
• Koch-backed group launches six-figure campaign for tax reform, by Naomi Jagoda

Write us with tips, suggestions and news: slane@digital-staging.thehill.com, vneedham@digital-staging.thehill.com, njagoda@digital-staging.thehill.com and nelis@digital-staging.thehill.com. Follow us on Twitter: @SylvanLane,  @VickofTheHill, @NJagoda and @NivElis.