What is the Financial Choice Act?
Even if you're not an avid and always up-to-date political buff, chances are, you've probably heard of the Financial Choice Act of 2017, and the controversy that is currently surrounding it.
Supporters like Paul Ryan vigorously support the act, claiming that it will reverse the negative effects caused by the Dodd-Frank regulations. Supporters are operating from the theory that rolling back certain requirements imposed by the Dodd-Frank regulations will provide a much-needed boost for small-town banks, which have long been the lifeblood of small-town American communities.
Others are far less certain of the Financial CHOICE Act's ability to create necessary changes; many fear that by reversing harsh Wall Street regulations, America will be setting itself up for another "Great Recession" similar to the one we experienced only a few years ago.
The act has met many vocal critics; Sen. Elizabeth Warren, for one, recently described the act as a "handout to Wall Street". Nancy Pelosi has publicly decried the act as a piece of "Wall Street First" legislation.
Emotions around the act are clearly heated. That's why we'd like to take some time to answer some important questions about the Financial Choice Act, its contents, and its potential effects.
What is the Financial Choice Act?
The Financial CHOICE Act, a massive piece of legislation totaling over 600 pages, was introduced to Congress in 2017; the House passed the legislation with very little resistance in early June. If enacted, the act promises to roll back regulations and protections relating to Wall Street, famously put in place by the Dodd-Frank law of 2010.
Sources like Business Insider are worried about these new regulations--or rather, the lack of regulation.
The Financial Choice Act: A Change In Regulation & Oversight
This legislation represents an unprecedented level of presidential oversight into the FHFA (Federal Housing Finance Agency). A few of these privileges include the ability of the president to hire and fire directors of this agency, which has long worked to keep a vigilant eye on mortgage giants like Freddie Mac and Fannie Mae.
No longer would the federal government be allowed to step in when banks are on the verge of collapse. Without this "backstop", many fear a greater level of volatility and ultimately, the failure of more financial institutions as a result of the Financial CHOICE Act. Another notable change that the Choice Act presents is stopping Government interference with payday And title loan lenders.
The most tangible fear is that, when faced with a financial situation such as the mortgage crisis, these "too-big-to-fail" institutions will cause a domino effect that will negatively impact the entire American (and even the global) economy.
The Financial Choice Act is expected to pass the Senate as well, given the Republican's party-line support for the legislation and near-fillibuster-proof majority. CNN's Money analysts have published a useful timeline for citizens who are concerned about the logistics of the Choice Act, and the changes it may force upon them.
It remains to be seen what effects the Choice Act will have on the national economy in the coming years; suffice it to say that the projected outlooks are mixed at best. Thanks for reading--keep checking in for the latest information about the Financial Choice Act and its impacts on the American economy.