Roger Yu

USA TODAY

The Dodd-Frank Act and its consumer protection authority took another blow this week.

Jeb Hensarling (R-Texas), chairman of the House Committee on Financial Services and a critic of the banking law, has sent a memo earlier this week to the committee leadership, outlining his plans to introducea new version of his legislation to quash many bank regulations and regulators’ enforcement authority in Dodd-Frank, according to a copy of the memo obtained by USA TODAY.

Last year, Hensarling introduced the Financial Choice Act, which aimed to remove some regulations in Dodd-Frank that the industry considers burdensome and costly. President Trump also issued executive orders last week to roll back key financial regulations of the Obama era.

Hensarling’s communication office referred questions to the committee. Staffers of several members of the committee did not immediately respond to messages seeking comment. CNBC first reported on the memo.

Dodd-Frank, passed in 2010 following the financial crisis, created the Consumer Financial Protection Bureau and established a wide array of rules on banks and financial services companies, including tests for liquidity and capital soundness, limits on predatory lending, and curbing certain types of trading activity.

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Emboldened by Trump’s actions, Hensarling now proposes changes to his earlier bill, the Financial Choice Act, that mirror key bullet points in the financial industry’s lobbying on Capitol Hill.

“This new version of the Chairman (Hensarling's) Wrong Choice Act is even worse than the original," according to a statement from Rep. Maxine Waters (D-Calif.), the Ranking Member of the House Committee on Financial Services. "This bill makes it crystal clear that Republicans mean to disarm our consumer protections, expose the American public to financial predators, and ultimately steer us in the direction of another Great Depression."

Among the new changes proposed by Hensarling:

*Restructuring the CFPB and its leadership. The CFPB is an independent agency, funded by the Federal Reserve. But Hensarling calls for changing it to a civil law enforcement agency, similar to the Federal Trade Commission. He also calls for the director of the CFPB to be a political appointee who can be fired by the president at will. Richard Cordray, the current director, is serving a 5-year term, set to expire in 2018. In his earlier bill, Hensarling called for replacing the director with a five-member commission. The CFPB did not respond to email messages seeking comment.

*Weakening CFPB’s reach. Hensarling is looking to limit the CFPB's enforcement powers to cease-and-desist orders and subpoena powers. He also wants to eliminate the CFPB's consumer education functions and repeal its databases containing consumer complaints. The agency has received more than 1 million complaints since 2010.

*Loosening banks’ requirements. Hensarling’s bill would remove the Federal Deposit Insurance Corporation from a review process to determine banks’ readiness in case of a recession, the so-called "a living will." Currently, large banks are required to submit a living will to the Federal Reserve and the FDIC, describing their strategy for “rapid and orderly resolution in the event of material financial distress or failure of the company.”

Banks also must maintain certain capital levels and maintain credit quality, and are annually checked by regulators to ensure compliance. Hensarling wants this so-called “stress test” to be conducted every two years.

Contributing: Kevin McCoy