The Short Version: Dodd-Frank Repeal
The point of it all is to break down the headlines, the week’s most controversial issues, determine why a particular issue is important and reveal the best arguments on each side of the story.
In a recent iterations of The Short Version, Cleo Abram talked about how we could end partisan gerrymandering. She looked at climate change and the Paris Climate Agreement. This week the subject is Dodd-Frankand what its repeal would mean to the health of our economy – and our own financial security.
Note: In general, if you have missed any of Cleo’s blogs, just go to our Home Page, type “The Short Version” into Search (magnifying glass icon) and poof, like magic, all her blogs will appear.
On Thursday, the country watched FBI Director James Comey testify before Congress. But that same day, the House of Representatives passed a bill that would strip oversight and regulation of the banking industry. It’s called the Financial CHOICE Act.
Why is it important?
The bill affects nearly every area of financial regulation. It rolls back significant pieces of the Dodd-Frank Act, passed in response to the 2008 crisis. Here are a few major examples:
- It eliminates the “Volcker Rule,” which prevents banks from using their own funds to make specific investments that increase their profits—and don’t benefit their customers. The practice is called proprietary trading.
- It shrinks the Consumer Financial Protection Bureau by removing it’s power to create rules or supervise financial services firms, allowing Congress to manage its budget, and changing its structure so the President can fire the agency director at any time.
- It exempts banks from certain regulations if they meet capital requirements, but increases the amount of capital necessary to meet those requirements in the first place.
- It removes the Orderly Liquidation Authority, which allows the federal government to take control of major financial institutions about to go bankrupt.
One obvious question: How will this play out in Congress? One caveat: It’s a mistake to focus too much on the partisan drama (there’s a lot of it) when the substance of this bill is so important. The short version is: Every House Democrat voted against the bill. Every Republican voted for it, with the exception of Rep. Walter Jones (R-NC). In the Senate, the lines are more blurry by necessity. A new bill would need to cross a 60-vote threshold, but there are only 52 Republicans in the Senate—so it can’t be passed along the same partisan lines. Senate Republicans could instead pass a smaller set of changes to Dodd-Frank through reconciliation, a process that would only require 51 votes.
Would the regulatory changes in the Financial CHOICE Act benefit the country?
More about Cleo Abram:
Cleo grew up in Washington D.C., lives in New York City, and loves to visit her parents in Telluride. She authors “The Short Version,” a newsletter that explains each week’s most important issue and both sides of the debate around it.
Cleo is a digital strategist now working at Vox, a general interest news site for the 21st century. Its mission is simple: Explain the news. Politics, public policy, world affairs, pop culture, science, business, and more.
Cleo’s work focuses on ways to share, educate, and inform using online platforms. While in college at Columbia University, she guided the school’s entrance into online education through her role as the youngest elected representative to the Columbia Senate, which makes university-wide policy.
She continued her work on online education at TED-Ed, the educational branch of the nonprofit, building new programs and online tools to support high school teachers worldwide.
Continuing her work with TED, Cleo founded and led an early TEDx conference, the organization’s community-specific series.
Most importantly, Cleo loves to ski.
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