BY SARAH BERKOWSKI
As the financial reform effort aimed at rolling back the 2010 Dodd-Frank Act winds its way through the U.S. Senate, it appears likely that the legislation, which substantially revised U.S. financial laws in the wake of the 2008 economic collapse, will be dismantled in the not-too-distant future.
Credit unions have been lobbying for relaxation of Dodd Frank almost since the day the bill was originally passed. Noting that it was unfair to lump them into Dodd Frank’s far-reaching efforts to regulate big banks, credit unions have consistently made the case that they are not-for-profit financial cooperatives, owned and operated by their members. As such, credit unions are focused on returning profits to their investors, unlike the big banks which answer primarily to Wall Street.
While the specifics of the Senate version of the Dodd Frank roll back still need to be crafted, the House version of the bill – known as the Financial Choice Act – would undo many of the key provisions of Dodd–Frank, paving the way for deregulation. Among other actions, the Act gives the president power to fire the directors of the Federal Housing Finance Agency (FHFA), which oversees mortgage giants Fannie Mae and Freddie Mac, and the Consumer Financial Protection Bureau (CFPB), the agency responsible for protecting consumers in the financial sector.
It also gives Congress purview over the CFPB’s budget, meaning lawmakers could defund the agency entirely, and prohibits the CFPB from regulating small-dollar credit or restricting arbitration. The CFPB would no longer have the authority to prohibit unfair, deceptive, or abusive practices and will be limited to enforcement actions derived directly from consumer protection laws.