American Financial Services Association

Transition Tracker | Financial CHOICE Act Update

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Transition Tracker | Financial CHOICE Act Update


Rep. Jeb Hensarling (R-TX), the chairman of the House Financial Services Committee, is finalizing changes to The Financial CHOICE Act (Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs). The bill was introduced in the House on September 9, 2016, but must be reintroduced in the new Congress.


The CHOICE Act is the legislation Hensarling is proposing to enact many Dodd-Frank reforms. Specifically, the act seeks to create checks-and-balances for the CFPB’s operations. Although the act may change a little from the version passed in the last Congress, we expect it will:

  • Replace the Consumer Financial Protection Agency’s (CFPB) sole director with a multi-member, bipartisan commission;
  • Subject the CFPB to the congressional appropriations process;
  • Reform the CFPB’s statutory mandate to ensure that it takes into account, and seeks to promote, robust market competition;
  • Provide the courts with enhanced authority to correct any erroneous interpretation made by the CFPB of its own legal authority;
  • Require the CFPB to complete a comprehensive cost-benefit analysis before adopting regulations and afford Congress the opportunity to approve significant CFPB regulations before they take effect;
  • Repeal the CFPB’s authority to deny consumers access to any financial products and services it declares “abusive.”
  • Better align incentives and risk by promoting portfolio lending;
  • Create a legal safe harbor for mortgage loans that are originated by a company and then held in portfolio

AFSA expects that the House will pass the CHOICE Act in the first few months of the new year. Progress in the Senate is a little harder to predict, as the legislation needs 60 votes to pass. If all Senate Republicans vote in favor of the bill, at least six Democratic senators would need to join them for the bill to pass. There will be significant pressure on Democrats who are up for re-election in states that the president-elect won to vote with the Republicans.

In addition, there will be pressure from the incoming pick for Treasury Secretary, Steve Mnuchin, who has emphasized the importance of increased lending. Even so, passage of the CHOICE Act in the Senate will be an uphill battle.


AFSA supports the CHOICE Act and will be working with Chairman Hensarling, his staff, their counterparts in the Senate, and others to help pass this important legislation.

December 7th, 2016 by