Transition Tracker | Congressional & Regulatory Rollbacks

President-elect Trump and an incoming Republican Congress have pledged to roll back the Dodd-Frank Act. How do they plan on doing that? And what obstacles may be in their way?

CONGRESSIONAL Roll-Back

Getting rid of some sections of the Dodd-Frank Act is a priority of House Financial Services Committee Chairman Jeb Hensarling (R-TX), who has been meeting with Trump. Hensarling said that he was pleased with the way Trump was approaching the Consumer Financial Protection Bureau (CFPB).

Hensarling’s plan is a bill approved by the House Financial Services Committee in September, the CHOICE Act. CHOICE is an acronym for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs. Among other things, the CHOICE Act would: reform the CFPB by making it a commission subject to Congressional oversight and appropriations, repeal the CFPB’s indirect auto lending guidance, repeal the CFPB’s authority to ban bank products or services it deems “abusive,” and repeal the CFPB’s authority to prohibit arbitration.

Other regulations that do not depend on statutory mandate could still be halted, reduced, or overseen by Congress through stand-alone bills or policy riders in spending measures. However, Hensarling’s bill is likely to be a starting point for House Republicans in 2017.

Even with a majority in both chambers, Hensarling and his partners in the Senate are not guaranteed a win. Incoming Senate Minority Leader Chuck Schumer (D-NY) said that he has the votes to stop the Republicans from repealing the Dodd-Frank Act. He predicted that the Senate’s Democratic minority would get help from Republicans in any such fight.

Senator Elizabeth Warren (D-MA) promised a populist storm against the new White House. Just two days after the election, Warren was at the CFPB on a previously scheduled briefing and told senior staff that she vowed to fight any assaults on the bureau’s structure or funding. Warren is also working with third-party groups and advocacy organizations to initiate an all-out assault on the financial services industry in the press and public. However, some Senate Democrats may be willing to support incremental Dodd-Frank changes. If that’s true, Warren, Schumer and their allies will not be able to block certain changes.

REGULATORTY Roll-Back

Given the power of the Senate Democrats, regulatory changes may be easier than passing controversial legislation. Granted, this will still take time. It will take time to staff the agencies. And it will take time for the new administration to evaluate all the laws and rules that could be on the chopping block, even though the transition team is already working on both.

Agency heads chosen by Trump could undo or adopt different versions of existing regulations. However, revising or eliminating a federal rule is not necessarily a simple process. The same steps that put the rule in place need to be followed to remove it. If the CFPB finalizes an arbitration rule, new leadership could delay the effective date or withdraw the rule. CFPB bulletins could also be withdrawn. Procedures could be changed. New leadership at the CFPB could modify the mortgage disclosure and servicing rules. At the Department of Defense, a new secretary could revise the 2015 Military Lending Act Regulations, though that will likely not be at the top of the new Secretary’s priority list. And at Federal Communications Commission, a Republican-majority could make changes to the regulations implementing the Telephone Consumer Protection Act.

Anything not completed by an executive agency can be dropped from the agenda altogether because of the wide discretion agency leaders have to set their agenda. Rules in development, including rules that have been proposed but not adopted, could be abandoned. At the CFPB, these rules could include the small-dollar rule, the arbitration rule (if it is still not finalized), the debt collection rule, and a larger participant rule for installment lenders.

WHAT IS AFSA DOING

AFSA is working with Hill staff and members of the transition team to explain how repealing or revising certain laws or regulations would help American businesses, the economy, and consumers. We are identifying and prioritizing the issues AFSA members have brought to our attention and will bring those issues to policymakers.