The House Financial Services Committee is set to mark up more than a dozen bills Tuesday, all aimed at reforming financial market regulations. Most of the bills target the Financial Stability Oversight Council (FSOC) and the Consumer Financial Protection Bureau (CFPB), two of the most invasive creations of the Dodd-Frank financial regulation bill.
Congress can go much further in fixing the many problems with the FSOC and the CFPB, so great care should be taken to recognize that these reforms are only temporary solutions. Nonetheless, it’s pretty hard to argue against stopping the FSOC—although only for six months—from designating any more nonbank financial companies for special regulations under the Fed. The FSOC will ultimately increase concentration risks in financial markets and cost consumers money.
There’s also nothing wrong with forcing the FSOC to hold more open meetings and be more transparent (H.R. 4387) or requiring the CFPB to implement a notice-and-comment period before it issues guidance. Reports have also surfaced that the House might take up legislation to relax restrictions on the “qualified mortgage” rule, another CFPB-enforced hindrance to U.S. capital markets.
The House should be commended for taking on much-needed reforms to some of the worst provisions of the Dodd-Frank law. Ultimately, though, Congress should rid financial markets of the overly burdensome FSOC and CFPB.
