On May 4, the House Financial Services Committee (“HFSC”) concluded its three-day markup of H.R.10, the Financial Choice Act (“FCA”), a bill to reform the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). The HFSC reported the bill favorably to the full House by a vote of 34-26. All 19 Democratic amendments were rejected on party-line votes. Republicans did not offer any amendments but focused their efforts on raising concerns about the extent to which Dodd-Frank has stifled economic growth and put taxpayer money at risk. Committee members debated a number of the more controversial provisions of the FCA, including Title VII to restructure the Consumer Financial Protection Bureau (“CFPB”) and remove its unfair, deceptive, or abusive acts or practices (“UDAAP”) authority; Section 841 to repeal the Department of Labor’s conflict of interest-fiduciary duty rule; Section 111 to repeal the Federal Deposit Insurance Corporation’s (“FDIC”) Orderly Liquidation Authority; Title IX to repeal the Volcker Rule; and numerous reforms to the Securities and Exchange Commission’s (“SEC”) shareholder proxy voting rules.

The FCA also contains a provision that would repeal the so-called “Durbin Amendment,” a Dodd-Frank provision that limits the interchange fees that banks charge merchants to process electronic debit transactions. The provision was not the subject of significant discussion during the markup, though it remains an issue on which both parties are seeking to find consensus.

What Happens Next?

The House is expected to consider the FCA before the chamber adjourns for its August District Work Period. However, the outcome and exact timing of the vote will depend largely on the ability of Republicans to reach agreement on a path forward regarding the Durbin Amendment and other hotly debated provisions of the FCA.

The Senate Banking Committee (“SBC”) leadership is expected to pursue financial regulatory reform in the coming months, which will likely include several bipartisan provisions from the FCA. SBC Chairman Mike Crapo (R-ID) has indicated on a number of occasions that the SBC will be considering targeted legislative measures to provide regulatory relief to community banks and facilitate capital formation. The SBC Dodd-Frank reform package will require bipartisan support in order to garner sufficient votes to invoke cloture and block a potential filibuster.

If the House and Senate pass different financial regulatory reform bills, all provisions from both bills will be considered by the conference committee. However, many of the more controversial provisions are expected to be left out of the final product.

Also important to note, the Department of the Treasury’s principles of financial reform will be released soon and will certainly influence the legislative process. The principles are expected to be accompanied by a list of issues that can be resolved through Executive Order and those that require legislation.

Notable Amendments

Below is a short description of a number of notable amendments that were offered and rejected during the markup.

CFPB Reform

Rep. Nydia Velázquez (D-NY) offered an amendment to strike Section 713 of the FCA, which would subject the CFPB to the congressional appropriations process. In expressing support for the amendment, Democrats noted the importance of insulating the agency from the political pressures. In response, Republicans defended Section 713 on the ground that the CFPB is an unaccountable agency that has actually harmed consumers.

Rep. Carolyn Maloney (D-NY) offered an amendment that would strike Section 736 of the FCA, which would remove the CFPB’s UDAAP authority. Democrats emphasized the importance of the CFPB’s UDAAP authority and suggested its removal will allow consumer harms to go unpunished. Republicans suggested that the CFPB has used its UDAAP authority to subvert the rulemaking process set forth under the Administrative Procedure Act. Republicans argued further ambiguity regarding the definition of UDAAP has created uncertainty that ultimately harms consumers.

Proxy Reforms

Rep. Maloney also offered an amendment that would strike Section 844 of the FCA, which would require shareholders to have one percent ownership for three years to submit a shareholder proposal, prohibit the SEC from requiring use of a universal proxy ballot, and amend the thresholds for resubmission of proxies. In expressing support for the amendment, Rep. Maloney indicated that Section 844 would exclude all but the largest investors from submitting proxy proposals. In response, Reps. Sean Duffy (R-WI) and French Hill (R-AK) indicated that many shareholders with relatively small ownership interests in publicly listed companies have submitted “political” shareholder proposals that result in a waste of corporate funds.

Volcker Rule

Rep. Josh Gottheimer (D-NJ) offered an amendment that would strike Title IX of the FCA, which would repeal of the Volcker Rule and require the banking regulators and the SEC to issue a report to Congress on the impact of the Volcker Rule (among other things). Rep. Gottheimer argued the Volcker Rule is necessary to protect FDIC-insured deposits from risky investment banking trading activities. In response, Rep. Bill Huizenga (R-MI) expressed opposition to the amendment by noting that the report requirement is redundant, as the SEC is expected to publish such a study in the next 60 days.


While the FCA moving to the House floor represents progress toward long-discussed Dodd-Frank reform, it is only the beginning of a process that will likely extend into next year. Much of this time will be consumed by the SBC pursuing targeted legislative measures . With this in mind, interested stakeholders should take advantage of this opportunity and provide input on their policy objectives.