In rare bipartisan vote, Senate eases some post-financial crisis bank regulations – By Jim Puzzanghera (latimes.com) / March 14 2018
Nearly eight years after Congress dramatically toughened banking regulations after the financial crisis, the Senate took a rare bipartisan step and voted Wednesday to ease some rules on small and midsize banks.
But larger banks also get some breaks in the legislation, a move that led to strong opposition from liberal Democrats who warned those moves increased the risk of another financial meltdown.
Still, a group of moderate Democrats — several of whom face reelection this fall in states handily won by President Trump — joined with Republicans in voting 67 to 31 to enact the first major rollback of the 2010 Dodd-Frank financial overhaul law.
“This bill … is designed to protect community banks and credit unions, and that’s why we have such bipartisan support for it,” said Senate Banking Committee Chairman Mike Crapo (R-Idaho), the legislation’s lead sponsor. “At a time of intense political polarization, we have proven we can work together to get things done.”
Sixteen Democrats and one independent, Angus King of Maine, who usually votes with the party joined all but one Republican in supporting the bill. That one Republican, Sen. John McCain of Arizona, was absent.
The bill faces an uncertain future in the House, where Republicans last year passed a more sweeping financial deregulation bill. But House Republican leaders could decide the Senate’s more modest changes are the best Congress can do at this point and pass the Senate bill.
President Trump commended the Senate on the bill’s passage and would sign it into law, the White House said.
But Trump also “looks forward to discussing any further revisions the House is interested in making, with the goal of bipartisan, pro-growth Dodd-Frank relief reaching his desk as soon as possible,” said White House Press Secretary Sarah Huckabee Sanders.
Most of the Senate bill’s provisions are designed to ease regulatory burdens on small banks and enjoy broad support.
Those banks would see new mortgage rules reduced if they make fewer than 500 loans a year. And banks with less than $10 billion in assets would be exempted from the Volcker Rule, which prohibits institutions from stock trading for their own profit and limits ownership of risky investments.
“We needed reform because of all the abuses that occurred,” Bill Trezza, chief executive of BAC Community Bank in Stockton, said of Dodd-Frank. “But it needed to be targeted, and now they’re targeting it and making sense out of it.”
The legislation also would add new consumer protections after Equifax Inc.’s massive data breach last year. Credit reporting companies would be required to let consumers freeze and unfreeze their files for free. Active-duy members of the military would also get free credit monitoring.
If that’s all the bill did, it would have received near unanimous support.
But the bill takes other more controversial steps to help larger banks that have drawn opposition from liberals such as Sen. Elizabeth Warren (D-Mass.), former regulators and the now-retired authors of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
“We start off wanting to help the small banks … but then Wall Street gets involved,” said Sherrod Brown (D-Ohio), who helped lead opposition to the bill.
The legislation also would add new consumer protections after Equifax Inc.’s massive data breach last year. Credit reporting companies would be required to let consumers freeze and unfreeze their files for free. Active-duy members of the military would also get free credit monitoring.
If that’s all the bill did, it would have received near unanimous support.
But the bill takes other more controversial steps to help larger banks that have drawn opposition from liberals such as Sen. Elizabeth Warren (D-Mass.), former regulators and the now-retired authors of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
“We start off wanting to help the small banks … but then Wall Street gets involved,” said Sherrod Brown (D-Ohio), who helped lead opposition to the bill.
The legislation would remove Dodd-Frank’s mandatory stricter oversight for about two dozen larger banks, those with assets of as much as $250 billion. The bill would give Federal Reserve regulators more flexibility in how they oversee large banks.
New Fed Chairman Jerome H. Powell promised to remain vigilant for threats to the financial system. But critics pointed to the Fed’s failure to act on subprime mortgages before the 2008 financial crisis and raised concerns about the desire of regulators appointed by Trump to be tough on banks.
The bill would weaken regulators’ ability to enforce fair-lending requirements by exempting 85% of banks and credit unions from Dodd-Frank data-reporting requirements designed to help identify discriminatory practices.
The bill even includes some benefits for Equifax and other credit-reporting companies. They would get immunity from lawsuits over credit monitoring for active-duty service members, and an arcane provision could make it easier for the firms to expand their businesses into providing credit scores for mortgages purchased by Fannie Mae and Freddie Mac.
The Congressional Budget Office estimated that the bill would add $671 million to the federal budget deficit over the next decade, largely because the changes would slightly increase the small chance that a systemically important financial institution would fail or a financial crisis would take place.
But the CBO admitted its estimate “is subject to considerable uncertainty” because of the difficulty of predicting a major bank failure or crisis.
The former lawmakers who shepherded Dodd-Frank into law — Sen. Christopher Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.) — said they opposed the new bill in part because it raises the asset threshold for mandatory tough bank oversight to $250 billion from $50 billion.
Although there is broad agreement that the current level was set too low, they said the bill pushes it too high.
Frank described the bill’s changes as modest and said its passage would still leave 90% of Dodd-Frank unchanged — including the Consumer Financial Protection Bureau created by the law — while removing opposition from popular community bankers.
“Once this bill becomes law … that’s the end of it,” he said of Republican efforts to dismantle Dodd-Frank.
But Sen. Patrick Toomey (R-Pa.), said Wednesday that “much more needs to be done.”
“This is a constructive step in the right direction, but it is a modest step forward,” he said.
http://www.latimes.com/business/la-fi-dodd-frank-deregulation-20180314-story.html
