FSC Considers Capital Requirements Under The Proposed "CHOICE" Act

The House Financial Services Committee ("FSC") examined capital requirements proposed under the Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs Act (the "CHOICE Act"). The Republican-proposed legislation offers a "market-based, equity financed Dodd-Frank off-ramp."

The proposed legislation would allow certain banking organizations that maintained simple leverage ratios of at least ten percent to "elect to be functionally exempt from the post-Dodd-Frank supervisory regime, the Basel III capital and liquidity standards and a number of other regulatory burdens that predate Dodd-Frank." FSC Chair Jeb Hensarling noted that although banking agencies would continue to supervise and regulate banking organizations that made capital elections, "the presumption [would] be that such institutions [were] operating safely and soundly." He asserted the credibility of the CHOICE Act's approach: