House Financial Services Committee Chairman Jeb Hensarling plansto release his revised proposal to scrap much of the Dodd-Frank Actby the end of the month.

The Texas Republican's new bill would give banks relief fromannual stress tests that assess whether they can survive financialmeltdowns and would strip the Consumer Financial Protection Bureauof key powers. It's an update of legislation he proposed last year,dubbed the Financial Choice Act, that stalled in Congress.

Hensarling outlined changes he plans to include in his updatedversion in a Tuesday memo to other lawmakers. He still faces longodds to getting the bill passed, especially in the Senate, where itwill probably need some Democratic support.

Hensarling's second crack at weakening Dodd-Frank is moreambitious, including numerous provisions that weren't in hisinitial proposal. The aggressiveness reflects a changed legislativelandscape with Republicans controlling the White House and all ofCongress.

'Major Elimination'

President Donald Trump said Tuesday that his administration isalready in the process of “doing a major elimination” of the“horrendous” rules put in place after the 2008 financialcrisis.

“Chairman Hensarling looks forward to working with the presidentand his administration to eliminate Dodd-Frank and replace it,”Sarah Rozier, his spokeswoman, said in an emailed statement. “Ourplan, which will be released in the next few weeks, is a bold andvisionary plan.”

California Representative Maxine Waters, the top Democrat on theFinancial Services panel, criticized the updated bill, arguing itwas “even worse” than Hensarling's earlier version. Republicanshave “prioritized the needs of Wall Street over the needs ofhard-working Americans,” she said in an emailed statement.

Changes Hensarling outlined in his Tuesday memo include reducingthe frequency of bank stress testing to every other year.

He also wants to eliminate much of the CFPB's regulatory powers,and transform it into a law enforcement agency. Additional changesinclude doing away with the CFPB's authority to supervise financialfirms and barring it from publishing consumer complaints that theagency compiles in a database.

'Sole Director'

He also wants the CFPB to be run by a sole director, removableat will by the president, according to the memo. The proposal maynot win the support of the finance industry, which has long arguedthat the agency should be run by a bipartisan commission.

Hensarling's plan is wide-ranging and goes beyond weakeningDodd-Frank. One provision would set up a committee to reevaluatethe Securities and Exchange Commission's enforcement activity.

Congress is currently in recess for two weeks. WhileHensarling's memo specifies major changes to his bill, manyelements remain from what he proposed in 2016, including a repealof the Volcker Rule ban on banks making investments with their owncapital.

Bloomberg News

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