House Republicans will advance legislation reforming the financial system and providing an alternative to President Obama’s 2010 overhaul to give voters a choice of policies in the 2016 election, the GOP chairman of the House Financial Services Committee said Thursday.
“To answer Speaker Ryan’s call, you will see a see a visionary piece of legislation laying out the Republican vision for banking and capital markets,” Jeb Hensarling of Texas told a group of reporters Thursday.
“And as part of that it will necessarily include repealing huge swaths of Dodd-Frank,” he added, referring to the 2010 law signed by President Obama that reshaped the regulatory architecture of the U.S.
Earlier in the day, House Speaker Paul Ryan said “we need to offer the country a real alternative in the form of a bold, pro-growth agenda,” and called on members of his caucus to offer ideas to advance next year. Ryan has said the caucus will pass legislation reforming taxes and addressing other big-ticket items, separate from what presidential candidates might do.
Hensarling’s committee already has moved legislation chipping away at parts of Dodd-Frank. On Thursday, the Texas conservative boasted that a half-dozen legislative items relating to Dodd-Frank have been signed this year.
But Republicans have not offered an alternative for regulating the financial sector and implementing rules to prevent another financial crisis, even as candidates have called for dismantling Dodd-Frank.
Hensarling said the biggest piece of the legislation would be a new regime for addressing the problem of “too big to fail,” or the phenomenon in which individual banks or financial firms become so large or interconnected that if they get in trouble, the government is forced to bail them out to prevent an economic crisis.
Under Dodd-Frank, major banks and certain non-banks, at the discretion of regulators, are labeled “systemically important,” meaning that they are subject to added regulation and supervision. Hensarling said he would aim to revise that system, charging that the label amounts to a “self-fulfilling prophesy” of future government aid. Instead, Republicans will aim to reform the bankruptcy process to better resolve failing big financial companies.
The chairman suggested that it might take a while for his committee to produce a bill, declining to say it would be ready by the spring.
Also underway is legislation on terrorism financing, a topic given renewed urgency in the wake of the attack in San Bernardino, Calif.
“Clearly the financing link to terrorism is a critical one,” Hensarling said. “It’s part of the critical fuel line of radical Islamic jihadism.”
And after Republican-backed legislation shuttering the bailed-out mortgage businesses Fannie Mae and Freddie Mac failed to advance in the full House last Congress, Hensarling this year will seek a more modest bipartisan measure preparing the two government-sponsored enterprises for a broad overhaul in the next administration.
