Despite Republican plans to scale back on Dodd-Frank, its co-author is optimistic the legislation will survive.
“It’s much better than where I thought we would be,” former Democratic Rep. Barney Frank of Massachusetts said recently, according to The Seattle Times.
Last month, the Senate passed legislation that would loosen the regulations placed on financial companies after the Great Recession, with the bill gaining bipartisan support.
However, the new bill still leaves many regulations in place — it is seen as a compromise because it doesn’t roll back as much as Republicans and Wall Street banks originally wanted.
While Frank said he would have voted against both versions of the bill, he considers the Senate version an “affirmation” of most of Dodd-Frank.
“Given the choice, I can live with it,” Frank said.
The new bill provides regulatory relief for small, regional banks that have been struggling under the new rules and raises the amount before a lender is deemed too big to fail.
Frank said the current threshold, $50 billion, “really was too low.” He said he would like it to be at $125 billion and indexed to grow with inflation. The Senate bill moves the threshold to $250 billion, which Frank says is a mistake, “but not a terrible one.”
“I would have liked a bigger margin of error,” he said.
But as far as Frank is concerned, it’s what is left out of the Senate bill that enables Dodd-Frank to survive. The bill doesn’t change the structure of the Consumer Financial Protection Bureau. In addition, it also doesn’t change Dodd-Frank’s requirement of having more collateral to back the kind of derivative trades that caused the 2008 meltdown.
While Congress can still try to change the bill, Frank doesn’t believe lawmakers will try to redo Dodd-Frank again anytime soon.
“If this bill becomes law, there will be no further legislative changes to the structure of (Dodd-Frank),” predicted Frank.