A House committee advanced legislation Wednesday that would repeal the mechanism set up in President Obama’s 2010 financial reform law to have the government take over and shutter a failing bank without causing a crisis.
The measure is the more controversial counterpart to a bill that sailed through the full House Tuesday night, changing the bankruptcy code to accommodate the failure of a big bank.
“It’s a very simple matter: For large, complex financial institutions, do you want bankruptcy or do you want bailouts?” asked Rep. Jeb Hensarling, the Texan who is chairman of the committee.
The House Financial Services Committee advanced another bill seeking to change another part of the 2010 Dodd-Frank financial reform law, namely the Consumer Financial Protection Bureau it created to monitor mortgages, credit cards and other financial products.
The consumer bureau bill, authored by Rep. Andy Barr of Kentucky, would require the bureau to be funded by congressional appropriations. Currently, it gets its funding from the Federal Reserve, which in turn finances itself with funding from its portfolio of bonds. Republicans have argued that placing the bureau outside the appropriations process deprives Congress of a key oversight tool.
Both measures, which advanced over Democratic opposition, are guaranteed to find opposition from President Obama, who has resisted bills that would chip away at one of his signature pieces of legislation.
But Republicans cast the measures as ways to limit bailouts and to rein in the consumer bureau, which they have criticized as unaccountable and overly powerful.
It’s a busy week for financial regulatory legislation. The House is scheduled to consider two more of the committee’s bills later this week, including one that would reform the Financial Stability Oversight Council, the super-group of regulators set up in Dodd-Frank to find threats to the economy that originate outside of Wall Street.
