Legislation proposed by U.S. lawmakers would reverse important investor protections adopted in the wake of the financial crisis, the North American Securities Administrators Association (NASAA) said Wednesday.
The proposed Financial Choice Act would repeal many of the reforms adopted under the 2010 Dodd-Frank Act, including: the fiduciary rule for retirement advice; the Consumer Financial Protection Bureau (CFPB), and the mechanism for designating a bank as systemically important.
In a statement to the U.S. House Financial Services Committee, NASAA says that the proposed bill, would “weaken important reforms and protections put in place by the Dodd-Frank Act in response to the financial crisis, and expose investors and the securities markets to significant, unnecessary and new risks.”
Read: Big unwind begins: U.S. lawmakers target crisis financial rules
Mike Rothman, NASAA’s president and Minnesota Commissioner of Commerce, told the committee on Wednesday, “It is clearly evident that the changes contemplated by the bill would significantly undermine and compromise the ability of regulators to effectively enforce financial laws and regulations.”
In particular, Rothman warned against scrapping the fiduciary rule, weakening oversight of private securities markets, and lowering standards for securities sold to the public.
“NASAA’s message to Congress is simple and clear: Please continue your commitment to protecting investors and do not undermine the important and overdue reforms implemented in the wake of the financial crisis, either directly through legislative repeals, or indirectly through a lack of appropriate funding or delayed execution,” Rothman said. “It is incumbent upon members of Congress and regulators to demonstrate an unwavering commitment to Main Street investors and continue to take the steps necessary to protect them.”