New Hensarling CHOICE Act to Include Further Changes to CFPB, FHFA
House Financial Services Committee Chair Jeb Hensarling (R-TX) earlier this week released a chart outlining several new provisions he intends to include in comprehensive financial reform legislation (The CHOICE Act) that he plans to introduce by the end of the month. The chart highlights areas of the new bill that will differ from similar legislation Hensarling introduced last Congress.
Several of the new provisions could have a direct impact on those regulations that affect HFA housing programs. Specifically, the revised bill would severely constrict the power of the Consumer Financial Protection Bureau (CFPB), which oversees much of the mortgage lending industry. The bill would rename the CFPB as the Consumer Financial Opportunity Agency (CFOA) and limit it to enforcing current consumer protection laws. The bill would also prohibit the agency from writing new consumer protection rules, exerting supervisory authority over financial firms, or enforcing fair lending laws.
The bill would establish a single director as head of the new CFOA, the same model that now applies to the CFPB. Unlike current CFPB law, however, the bill would authorize the President to remove the CFOA director at will (currently, the President can only remove the CFPB director for cause). This is a departure from the original CHOICE Act, which would have replaced CFPB’s single director structure with a bipartisan commission.
The new CHOICE Act would also allow the President to remove at will the director of the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. As with CFPB, the President currently may only remove the FHFA director for cause. The term of the current FHFA director, Mel Watt, ends in early 2019. The previous CHOICE Act would have restructured FHFA into an independent commission.
In addition to the changes described above, the CHOICE Act will contain a number of provisions reforming federal financial regulations. It will also allow financial firms to exempt themselves from certain federal regulations if they are able to meet minimum capital standards.