Dodd-Frank re-write...what does it mean?

[Tom Chen]

Hi BP...

In the news recently, the new administration is trying to re-write the Dodd Frank bill. Forgive my ignorance, but what did the bill do that harmed the REI community?

How will the re-write benefit us?

_______________________

The House Financial Services Committee approved a bill Thursday to repeal and rollback significant pieces of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The panel voted to send Chairman Jeb Hensarling's (R-Texas) Financial CHOICE Act to the House floor, 34-26, along party lines. The bill would accomplish much of a long-term GOP goal: to revoke the expansive financial regulations passed under President Obama after the 2008 crisis and long protected by Democrats.

All of the panel's Democrats voted against the bill, following more 24 hours of contentious debate dragged across three days. Republicans blocked several amendments offered by Democrats that would restore the key parts of Dodd-Frank stripped by the CHOICE Act.

The intense, exhaustive markup included hours of lawmakers fighting over the true cause of the 2008 crisis, the Federalist Papers, the founding of the United States, Russia's influence on the 2016 presidential election, President Trump's potential conflicts of interest and the Emoluments Clause of the Constitution.

Hensarling's bill would remove critical regulations placed on the financial sector through Dodd-Frank. Republicans have long argued that the 2010 bill has suffocated economic growth, crushed banks and limited choices under overbearing, costly rules.

"There is no excuse in the United States of America for 2 percent growth." Hensarling said Tuesday. "Those are American dreams that will never be realized."

The CHOICE Act allows banks to opt out of Dodd-Frank upon holding enough cash, and limits 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 disassemble it before it collapses and triggers another crisis. The CHOICE replaces Dodd-Frank's Orderly Liquidation Authority with a special bankruptcy process that aims to insulate the financial markets from a failing bank's fallout.

Democrats offered several amendments to preserve the OLA that were defeated by Republicans. Liberal lawmakers insisted that removing those regulations risks starting another financial meltdown.

"I'll take 2 percent growth over the recession of 2008 any day of the week," Rep. Mike Capuano (D-Mass.) said, calling the bill "irredeemable" and "dead on arrival" in the Senate.

The CHOICE Act also places major restraints on the Consumer Financial Protection Bureau (CFPB), an agency created by Dodd-Frank that the GOP has long called unaccountable, abusive and redundant.

The bill renames the CFPB the Consumer Law Enforcement Agency, and reduces its power to enforce pre-existing consumer protection laws. It's sole director would be removable at will by the president, and its budget would be controlled by Congress through the traditional appropriations process.

The CFPB currently has expansive power to crackdown on what it considers "unlawful and abusive practices," can write regulations on the financial industry and is funded through the Federal Reserve.

Panel Republicans lambasted the CFPB as an abusive threat to the economy and to constitutional separation of powers, while Democrats touted the more than $11 billion the agency returned to consumers through enforcement actions.

Democrats offered several amendments to strip those provisions from the bill, which also fell along party line votes.

Throughout the hearing, Democrats criticized Republicans for starting with a massive, 500-page bill combining bipartisan measures with long-sought GOP targets.

Several asked Hensarling to abandon the CHOICE Act in favor over a bill focusing on community and mid-size banks. Relief for smaller banks and credit unions is one of the few areas of bipartisan agreement on the committee.

"There are times you have to have discipline to protect people," said Rep. Ed Perlmutter (D-Colo.) "Focus just on the small banks. We can make those improvements."

Rep. Jim Himes (D-Conn.), a former Goldman Sachs trader, added, "There is no evidence that the capital markets aren't working, and the sad thing is, no one on this side will tell you that Dodd-Frank is perfect."

Despite years of heated partisan battles over Dodd-Frank, Hensarling said the committee has a track record of working together and could continue to do so after the CHOICE Act clears.

"This committee has a history of working together on a bipartisan basis. Not all bills are bipartisan." Hensarling said. "We are going to continue on with our markup of this act, but in no way, shape or form does that preclude us from other ways to find common ground."

The CHOICE Act now heads to the House floor, though it's unclear when the full chamber will vote on it.

Some GOP members are critical of a provision in the bill that would repeal a Dodd-Frank measure capping fees charged by debit companies to retailers for card processing.

Powerful bank lobbies, such as the American Bankers Association, Independent Community Bankers of America and Consumer Bankers Association, have lined up behind Hensarling's bill, the most expansive effort to reduce financial regulations imposed in Dodd-Frank.

The bill could likely pass in the House along party lines, though it's widely considered a long-shot to be taken up in the Senate.

Senate Banking Committee Chairman Mike Crapo (R-Idaho) and ranking Democrat Sen. Sherrod Brown (Ohio) said they'd start on smaller, bipartisan bills focused on community banks relief and housing-finance reform.

The panel is scheduled to hold a hearing on housing finance Thursday featuring former Federal Housing Finance Agency Director Mel Watt.

http://www.msn.com/en-us/news/politics/house-panel...

[Jay Hinrichs]

@Curt Smith  I think the intention of DF  as it related to owner finance deals.. was simply to curb the victimizing of minority or low income buyers who got duped many times into buying properties for 2X to 3X what they were worth on the guise that its owner financing no money down no credit .. which is just another form of sub prime lending.

And it clearly was going after those that are in the business.. IE your doing more than 3 then its probably your business model to do these types of transactions and the DF expects you to step up and come under some over site..  did not hurt the single owners of props that want to sell one house they own..

Obvioulsly not everyone in that end of the business Lonnie deals is gouging.. I just say that as a broad based statement.. but I look at some of the actors in TExas for instance preying on the non English speaking Hispanic populations.. and its gross profiteering..   This I believe is what they were trying to reign in.

And if your in the business and going to do 20 plus deals a year like this whats the matter with getting licensed properly to do it.. Seems reasonable from my end I guess.

The other unintended consequence of this was JUST TRY TO FIND AN RMLO that will write a little MH deal.. there is no money in it..  Most RMLO s work for a broker and they can't do one of deals.

so finding this RMLO in many cases is pretty tough to down right impossible, since their license is on the line.. and your dealing with borrowers who probably really don't qualify...

anyway... not for again    its just how I see it..  I am a Mortgage banker ( inactive) but I try to keep up on trends.