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Behind the surprise bipartisan push to blunt Dodd-Frank

08 March, 2018, 01:39 | Author: Priscilla Morrison
  • Bloomberg
Sen. Mike Crapo R-Idaho chairman of the Senate Banking Housing and Urban Development Committee speaks at a hearing in Washington D.C. last month

"The bottom line is that S. 2155 does not require the deregulation of foreign banks, but they will no doubt be deregulated, which will once again put US taxpayers on the hook for bailouts of foreign banks rather than the taxpayers of those foreign countries", he said.

Several Democratic lawmakers facing tough re-election races this year have broken ranks with Minority Leader Chuck Schumer, D-N.Y. and Sen. The bill, notes the CBO, would "increase the likelihood that a large financial firm with assets of between $100 billion and $250 billion would fail".

Most Senate Democrats rejected Federal Reserve Board chairman Jerome Powell's assurances that the bipartisan bill offering relief from Dodd-Frank rules wouldn't loosen rules on foreign megabanks like Deutsche Bank and Santander. "As someone who helped put together the Dodd-Frank legislation, I know there are areas where we can help improve access to capital for consumers, farmers, and small businesses so they can grow the economy and create jobs", said Sen. Far from being a giveaway to big banks, the bill targets banks between $50 and $250 billion in assets, banks which are the main drivers of small business lending and consumer banking products.

"The Senate - with the support of some Democrats - is set to start debate on a bill to roll back regulations on the same big banks we bailed out a few years ago". Elizabeth Warren, D-Mass. The probability of those events is deemed to be small under current law.

"A bank that is a quarter of a trillion dollars is not a community bank". Critics said that removing this oversight could lead to problems that led to the 2008 recession, mainly predatory lending and investing.

The Dodd-Frank bill received its name from its sponsors: former Sen.

Even former MA congressman Barney Frank, a Dodd-Frank co-author, concedes "that his bill was too harsh on smaller banks, which are struggling with regulatory burdens while the big banks can deploy an army of attorneys to ease compliance".




"As Congress has sought to make a common sense change to the way capital rules treat custody assets, we have asked that they apply that change to all custody banks to maintain a level playing field in this important business", a Citigroup spokesman said in an email Friday.

Warren took to Twitter on Friday and warned that the bill, which she called the "bank lobbyist act", benefits only big banks and said she was planning a series of public events to decry the legislation.

Democratic Sen. Elizabeth Warren of MA is already posturing to stop the Republican's effort to rewrite Dodd-Frank. The Senate bill would ensure that most of it stops being generated at all.

Even as Congress drops the ball on crucial issues like gun control and DACA, lawmakers plan to move forward this week with something virtually no one is asking for: bank deregulation. Their stated concern is the added rules, protections and compliance costs have overshot, causing financial firms to be less efficient and less profitable.

Crapo and four moderate Democrats on the panel negotiated the deal that resulted in the bill that passed out of the Banking Committee in December. They probably have outrage fatigue to thank for not getting greater pushback from their constituents, but it is still worth taking a look at some of the data points Democratic senators are using to justify their votes.

Warren, whose brainchild is the Consumer Financial Protections Bureau (CFPB), is one of the most ardent supporters of the 2010 law, believing it is a crucial safeguard against malpractice on the part of large banks.

The bill would change the regulatory framework for small depository institutions with assets under $10 billion (community banks) and for large banks with assets over $50 billion, as well as revise consumer mortgage and credit-reporting regulations and the authorities of the agencies regulating the financial industry.

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