Hensarling crafting bill to repeal 'huge swaths' of Dodd-Frank

House Financial Service Committee Chairman Jeb HensarlingThomas (Jeb) Jeb HensarlingEx-GOP congressman heads to investment bank The next two years of federal housing policy could be positive under Mark Calabria Why Ocasio-Cortez should make flood insurance reform a priority MORE (R-Texas) is crafting legislation that would repeal huge swaths of the Dodd-Frank financial reform law.

Hensarling said the biggest piece of the sweeping legislation would focus on “too big to fail” and the designation of non-bank financial institutions as “systemically important financial institutions,” or SIFIs.

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“There’s no secret here that we do not believe in the entire SIFI regime,” Hensarling told reporters on Thursday.

“I don’t believe in SIFIs. I don’t believe in unicorns,” he said.

He said setting up the designation of certain firms as “too big to fail is a self-fulfilling prophecy.”

Hensarling balked at nailing down a timeline for the bill when asked whether it could be ready by the spring.

The Texan has regularly pressed regulators over how they determine whether a financial firm poses risks to the financial system.

On Tuesday, the panel held a hearing with eight members of the Financial Stability Oversight Council, which was created by the Dodd-Frank law and decides which financial institutions are important to the financial system. 

During the hearing he said that non-banks getting the SIFI label are “tomorrow’s taxpayer-funded bailouts.”

“Designation also ominously grants the Federal Reserve near de facto management authority over such institutions, thus allowing huge swaths of the economy to potentially be controlled by the federal government,” he said.

MetLife Insurance, which was designated a SIFI, is trying to get the label removed.

The panel also will restart work on a housing finance reform bill next year and may take a more piecemeal approach this time around. 

"I haven't abandoned all hope on getting some modest bipartisan progress done," Hensarling said. 

The chairman said he has talked with the Federal Housing Finance Agency (FHFA) as they continue to develop their securitization platform to ensure that it is "constructed in a way that could lay the foundation for whatever solution Congress comes up with."

That could be some "bipartisan consensus potentially on a little bit more risk-sharing," he said. 

He acknowledged that 2016 is an election year, which makes bipartisan collaborations all the more difficult.

Hensarling said he would review housing reform legislation he introduced in the summer of 2013 — the Path Act — which never made it to the House floor and see what improvements can be made. 

The committee will put out a plan whether bipartisan or only backed by Republicans, he said.

He also said the panel would issue a report soon on the debt ceiling from an investigation and oversight of the Federal Reserve and Treasury that should be out soon.