House Dems Blast Financial Choice Act, Call for Another Hearing

Lynch continued: "We're paving the way" for the next recession in the Choice Act. Rep. Brad Sherman, D-Calif., told Hensarling there are "twelve bills that the Choice Act has swallowed up," and that those bills "have bipartisan support and will pass if we bring them up separately."

What's in the Act

The Act's measures include dismantling the Consumer Financial Protection Bureau, getting rid of the Volcker Rule, and requiring the Labor Department to issue a fiduciary rule that mirrors one promulgated by the Securities and Exchange Commission.

Hester Peirce, director of the Financial Markets Working Group and Senior Research Fellow at the Mercatus Center at George Mason University, who testified at the hearing, told ThinkAdvisor in separate comments that the Choice Act would "repeal the DOL's fiduciary rule and give the SEC the lead in the fiduciary rule space. The SEC is the more natural regulator to take the lead in this area, given the agency's extensive experience with retail investors."

In his opening remarks, Hensarling said his bill "replaces onerous government fiat with market discipline; ends bailouts with bankruptcy; throws a deregulatory life preserver to our community financial institutions; replaces complexity with simplicity; holds both Washington and Wall Street accountable; and unleashes capital formation so the economy can move yet again for the betterment of our citizens."

Under the Financial Choice Act, he said, "there will be economic opportunity for all and bank bailouts for none."

Peter Wallison, Arthur F. Burns fellow in financial policy studies at the American Enterprise Institute, who testified at the hearing, stated that "one way to understand the [Choice] act and the need for the comprehensive reform that the Choice Act provides, is to recognize that the Dodd-Frank Act was completely unnecessary."

Dodd-Frank, he said, "was based on a false diagnosis of the 2008 financial crisis by an administration and a Congress that didn't even try to understand why the crisis occurred. They simply assumed — or wanted to believe — that the crisis was caused by insufficient regulation of the financial system and greed on Wall Street."

Wallison went on to say that the causes of the 2008 financial crisis "had nothing to do with a lack of regulation, or even greed on Wall Street. That is why the major provisions of this destructive [Dodd-Frank] law should be repealed." The crisis, he asserted, "was caused by the government's housing policies."

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