	Introduction

Representative Jeb Hensarling, chairman of the House Committee on Financial Services, released a discussion draft titled the Financial CHOICE Act (FCA) on June 23, 2016. 5983 on September 9, 2016. The FCA is a wide-ranging proposal with 11 titles that would alter many parts of the financial regulatory system. Much of the FCA is in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), a broad package of regulatory reform legislation passed following the 2007-2009 financial crisis that initiated the largest change to the financial regulatory system since at least 1999. Many of the provisions of the bill would modify provisions from the Dodd-Frank Act, although others would address long-standing or more recent issues. This report highlights major policy proposals in the bill, but it is not a comprehensive summary of the bill. Regulatory relief provisions can be divided into the same categories discussed above: prudential regulation and consumer protection. Examples of relief from prudential regulation that would be provided by the FCA include the following:
Some provisions would modify or repeal prudential rules that regulators have issued. In exchange for choosing to be subject to the 10% leverage ratio, banks would be exempt from risk-weighted capital ratios; liquidity requirements; certain merger, acquisition, and consolidation restrictions; limitations on dividends; living will mandates; and other regulations. Provisions related to derivatives markets. 4894 as reported by the Financial Services Committee. Under the new chapter of the Bankruptcy Code, there would be several resolution options. Financial regulators conduct rulemaking, supervision, and enforcement to implement law and supervise financial institutions. Thus, congressional control over an agency's funding reduces its independence from (and increases its accountability to) Congress. CFPB . Critics point to structural issues, such as the presence of a director rather than a board and funding that is outside the traditional congressional appropriations process. The APA contains rulemaking requirements and procedures for agency adjudications, and it provides for judicial review of rulemaking and agency actions. Three proposals in the FCA—requiring cost-benefit analysis (CBA), modifying the Congressional Review Act, and overturning the judicial Chevron Doctrine—would modify regulator discretion and accountability in the rulemaking process. H.R. Unlike the current CRA, the FCA would allow a court to review whether a financial agency has completed the necessary requirements for a final rule to take effect. For example, the FCA would increase the maximum civil penalties that could be assessed for violations of certain laws, such as the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
The Financial CHOICE Act (FCA; H.R. 5983), sponsored by Chairman Jeb Hensarling, was ordered to be reported by the House Committee on Financial Services on September 13, 2016. The bill is a wide-ranging proposal with 11 titles that would alter many parts of the financial regulatory system. Much of the FCA is in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act; P.L. 111-203), a broad package of regulatory reform legislation that initiated the largest change to the financial regulatory system since at least 1999. Many of the provisions of the bill would modify or repeal provisions from the Dodd-Frank Act, although others would address long-standing or more recent issues.
This report highlights major proposals included in the bill but is not a comprehensive summary. In general, the changes proposed by the FCA can be divided into two categories: (1) changes to financial policies and regulations and (2) changes to the regulatory structure and rulemaking process.
Major policy-related changes proposed by the FCA include the following:
Leverage Ratio—allowing a banking organization to choose to be subject to a higher, 10% leverage ratio in exchange for being exempt from risk-weighted capital ratios, liquidity requirements, and other regulations. Regulatory Relief—providing regulatory relief throughout the financial system to banks, consumers, and capital market participants, including by repealing the Volcker Rule, Durbin Amendment, and fiduciary rule. Too Big To Fail—repealing the designation of systemically important financial institutions and emergency assistance and replacing an option for winding down systemic institutions with a new chapter in the Bankruptcy Code that is tailored to financial firms.
The FCA also includes structural and procedural changes that affect the balance between regulator independence from and accountability to Congress and the judiciary, including
Leadership—modifying the leadership structure of agencies with a single head to be bipartisan, multimember commissions. Funding—subjecting regulators that currently set their own budgets to the traditional congressional appropriations process. Rulemaking—requiring regulators to perform more detailed cost-benefit analysis when issuing new rules and to use cost-benefit analysis to review existing rules, as well as requiring congressional approval for a major rule to come into effect. Judicial Review—requiring courts to apply a heightened judicial review standard for agency actions taken by financial regulators rather than applying varying levels of deference to the agencies' interpretations of the law. Enforcement—increasing the maximum civil penalties that could be assessed for violations of certain banking and securities laws and restraining certain agency enforcement powers. CFPB—renaming the Consumer Financial Protection Bureau as the Consumer Financial Opportunity Commission and modifying its powers, leadership, mandate, and funding.