WASHINGTON — Since the Dodd-Frank Act was signed into law nearly seven years ago, Republicans have promised to make it their mission to repeal the legislation, which they say is strangling the financial industry and killing jobs.
They will take their most significant step on Thursday when the House of Representatives votes on a bill that would gut major elements of the regulatory legislation, drafted in the aftermath of the 2008 financial crisis.
The bill coming up for a vote, the Financial Choice Act, has maintained a low profile compared with Republican plans on health care and taxes, but it represents a major part of an agenda the Republicans say will unshackle the economy and accelerate economic growth.
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"This legislation comes to the rescue of Main Street America," Speaker Paul D. Ryan said Wednesday. "The Dodd-Frank Act has had a lot of bad consequences for our economy, but most of all in the small communities across our country."
The bill is expected to pass the House with only Republican support. It faces long odds of becoming law, however, because it would require the support of Democrats in the Senate to reach President Trump's desk.
Still, parts of the bill could eventually be enacted as lawmakers continue their efforts to chip away at regulations they say are stifling the economy.
The House vote comes before a Treasury Department report due in the coming days that will detail the Trump administration's plans for easing financial regulations.
The Choice Act would exempt some financial institutions that meet capital and liquidity requirements from many of Dodd-Frank's restrictions that limit risk taking. It would also replace Dodd-Frank's method of dealing with large and failing financial institutions, known as the orderly liquidation authority — which critics say reinforces the idea that some banks are too big to fail — with a new bankruptcy code provision.
In addition, the legislation would weaken the powers of the Consumer Financial Protection Bureau. Under the proposed law, the president could fire the agency's director at will.
According to an analysis by the Congressional Budget Office, the Financial Choice Act would reduce federal deficits by $24.1 billion over a decade. The budget office cautioned, however, that there was considerable uncertainty in its estimates because it was difficult to predict when a "systemically important" financial firm might fail.
The deregulation push comes as the Trump administration and Republicans in Congress are pursuing policies to spur economic growth to an annual rate of 3 percent. Business lobbyists, banks and conservative think-tanks have been supportive of the plans, which they argue will ease lending and help small companies create jobs.
"The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act is among the most inappropriately named laws ever enacted in the U.S.," said Norbert Michel, a Heritage Foundation Research Fellow. "It neither reformed Wall Street nor protected consumers, and it imposed massive new regulations on banks far away from Wall Street."
Progressive groups have attacked Republicans for making populist promises on the campaign trail and then selling out to Wall Street donors.
"This legislation would be better dubbed Wall Street's Choice Act as it would have a devastating effect on the ability of regulators to protect consumers and investors from Wall Street exploitation and the economy from financial risks created by too-big-to-fail megabanks," Marcus Stanley, policy director at Americans for Financial Reform, wrote in a letter to Congress on Wednesday.
House Democrats have assailed the bill, and they are expected to line up against it on Thursday, with the vote expected to take place after a debate on the House floor.
"The Wrong Choice Act is a vehicle for Donald Trump's agenda to get rid of financial regulation and help out Wall Street," said Representative Maxine Waters of California, the ranking Democrat on the House Financial Services Committee. "It's a deeply misguided measure that would bring harm to consumers, investors and our whole economy."