Image Source: Ty Wright/Getty Images via Vanity Fair
Why is this man smiling all the time?
Smiling faces sometimes pretend to be your friend
Smiling faces show no traces of the evil that lurks within
Smiling faces, smiling faces sometimes
They don’t tell the truth
“Smiling Faces Sometimes” - Undisputed Truth
It seems like House Rep Jeb Hensarling wants to turn back the clock to 2008 when it comes to financial regulatory reform! According to this piece by Bess Levin at Vanity Fair, the House recently passed bill H.R. 10 known as the Financial Choice Act of 2017.
I think when Republicans use the word "choice," they mean no options for either you or me - unless of course, you're a wealthy investment banker who loves deregulated markets and the occasional three-olive martini!
The FCA of 2017 does some rollbacks that would make Wal-Mart jealous. For starters, the bill would:
1) Abolish restrictions set by the Volcker Rule on certain speculative investments by banks. If the Volcker Rule is eliminated, that will give banks opportunities to invest your hard earning saving accounts in risky securities that are unsupported by real assets. When banks speculate with one another on illiquid assets that have little to no investment value, their gambling can only lead to one outcome - another financial disaster for ordinary people like you and me.
2) Rescind Durbin Amendment limitations on fees that may be charged to retailers for debit card processing. The Durbin Amendment put a cap on the amount charged to retailers by banks whose debit cards are used by shoppers. Should this restriction be lifted, banks will again charge retail merchants sky high interchange fees for every debit card purchase made.
These fees ultimately get passed on to you, the shopper, by retailers who have to eat those costs as a part of doing business. The fees, in my opinion, are an unfair financial burden on a retail sector that is already struggling to stay afloat given the number of stores filing for bankruptcy month after month.
3) Removes the Financial Stability Oversight Council's authority to designate non-bank financial institutions and financial market utilities as "systemically important" (also known as "too big to fail").
What this means is that organizations like savings & loans, credit unions, and insurance firms as examples of non-bank financial institutions. Clearing exchanges such as the CLS Bank International or the Depository Trust Company are examples of FMU's. These institutions would no longer be subject to oversight by the FSOC. The lack of supervision with these types of institutions could have grave consequences if our financial markets become fragile based on systemic market dislocations from the actions or lack thereof by these market participants.
There are other problems with the House version of the FCA of 2017 that are too numerous to mention here. The U.S. Senate will most likely come up with their version of the bill before it goes to conference.
So, I implore you once again to contact your U.S. Senator to please re-consider the wholesale destruction of the Dodd-Frank Act. Republicans in both houses of Congress seem hell-bent on removing any legacy of former President Barack Obama's signature legislative achievements. My fear is that the aggressive attempts by the GOP to deregulate our financial markets may once again lead to another financial meltdown like the one we saw in 2009.
Boy, I hope I'm wrong!
Thanks for reading @ellofinance today! Make it a great week!
hat-tip: thanks @tvansantana!