The Financial CHOICE Bill and the Regulation of Credit Rating Agencies:opening the gates for the gatekeeper

Abstract

In 2010, the US introduced The Dodd-Frank Wall Street Reform and Consumer Protection Act 2010, with the expressed aim of “promoting the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail’, to protect the American taxpayer by ending bailouts, [and] to protect consumers from abusive practices”[1]. Only seven years later, Republican lawmakers – Jeb Hensarling in particular – have decided that Dodd-Frank has failed in its mission and that there needs to be sweeping reforms established to repeal the “provisions of the Dodd-Frank Act that make America less prosperous, less stable, and less free”[2]. In this article we will be introduced to the Bill in more detail, in addition to examining its potential to become an Act of Law. It is important to note here, before the analysis even begins, that this Bill may never see the light of day as a piece of enacted legislation. It is possible, although some have argued it is more likely probable[3], that the Bill will pass through the House of Representatives but will be dismissed in the Senate, but this should not stop us from considering the potential effects of the Bill upon the credit rating industry – as just one acute example – for two reasons. First, even though the widely held belief is that the Bill will not become an Act, it still may do; secondly, it is important in this political environment that we all seek to become proactive in assessing the actions of the leaders in society, particularly in light of the politically volatile environment the West finds itself in post 2016.