Rep. Jeb Hensarling (R., Texas), chairman of the House Financial Services Committee, gave a speech yesterday in New York that provided some background into his plans to propose new legislation to replace Dodd-Frank. Of the many items the proposed legislation would un-wind includes the caps placed on card interchange fees, places restrictions on the powers of the CFPB, both of which would have enormous impact on the payments industry. Morning Star reported:
While the steps to reduce regulation would be welcome on Wall Street, Mr. Hensarling’s bill also does include a provision that would likely raise the ire of the financial industry: a plank to “demand accountability from Wall Street through enhanced penalties for fraud and deception.”
“Dodd-Frank has failed,” said Mr. Hensarling said in a video posted Friday on the committee’s website. “We have not become more prosperous. We are not becoming more stable. And, regrettably, we are also less free due to Dodd-Frank.”
The chances of this legislation being passed are slim at best. There is very little anticipated in this legislation that would get any support from Democrats, and would most likely require a Republican President to gain passage.
The bill has no chance of becoming law this year, with Democrats in the Senate likely to block it, and Mr. Obama certain to veto it if it came to his desk. But the details are significant as they help define the Republican agenda for financial regulation, should the party win control of the White House in November. Donald Trump, the presumptive GOP nominee, has said he would try to repeal Dodd-Frank, but hasn’t given any details about what his plan would look like. Mr. Hensarling’s bill helps fill in some of the blanks of how a Republican-led government would likely proceed.
The details of the bill are anticipated next week. We will keep our eye on this one.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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