A senior Member of the House Financial Services Committee, Rep. John Campbell (R-CA) has introduced legislation intended to reduce systemic risk even as it repeals several key aspects of the Dodd-Frank Act. The sponsor intends the legislation to replace the systemic regulatory and resolution provisions in the 2010 law with a new, market-based framework. The bill thus adds to it a new early-remediation criterion for bank holding companies with assets above $50 billion, although it appears to leave in place the Dodd-Frank resolution framework for them other financial-services firms. The provisions in Dodd-Frank that permit the Financial Stability Oversight Council to name non-bank systemic financial institutions (SIFIs) would not be replaced, but the rules governing them would be repealed even though the FRB would still have supervisory authority over all SIFIs, including the large BHCs (already under its authority) specifically targeted in this legislation. Although the bill raises many questions, it speaks to strong sentiment in Congress that the Dodd-Frank framework does not satisfactorily resolve the too-big-to-fail (TBTF) question.
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