On Wednesday (March 14), the Senate passed legislation that would loosen the regulations placed on financial companies after the Great Recession, with the bill gaining bipartisan support.
According to news from The Washington Post, the bill passed 67 to 31 and had the support of both Republicans and Democrats, despite contention within the Democrat party. With the bill, more than two dozen banks will be relieved of regulations that were placed on them under the Dodd-Frank Act.
However, the new bill still leaves many regulations in place. Mike Crapo, Idaho Republican and Senate Banking Committee chairman, sponsored the bill, which is seen as a compromise because it doesn’t roll back as much as Republicans and Wall Street banks originally wanted. The 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. Moderate Democrats supported the bill, noted the report.
Sarah Huckabee Sanders, the White House press secretary, was pleased with the result: “The bill provides much-needed relief from the Dodd-Frank Act for thousands of community banks and credit unions and will spur lending and economic growth without creating risks to the financial system,” she said.
Despite the passing of the legislation in the Senate, Reuters reported the U.S. House of Representatives won’t approve the bill without more provisions that would relax regulations even further. Citing comments by Representative Jeb Hensarling, chairman of the House Financial Services Committee, Reuters reported his stance on the bill not passing has created more uncertainty for Congress. “The bill is staying on the Speaker’s desk unless and until they negotiate with the House,” he said. Reuters noted that indicates Speaker Paul Ryan backs Hensarling. A spokeswoman for Ryan, AshLee Strong, said “all options are on the table to ensure that common-sense bipartisan House solutions are included in a final bill,” noted Reuters.
Under the original legislation, banks that had more than $50 billion in assets fell in the too-big-to-fail category and, as a result, faced stringent restrictions, including the annual stress test. The new bill increased the amount to $250 billion in assets, which would relieve several big financial firms, including American Express, Ally Financial and Barclays, of those stringent rules.
Leading up to the vote, Senator Elizabeth Warren, a Democrat from Massachusetts, warned that relaxing the Dodd-Frank rules could create another government bailout situation. Citing comments made on “Meet the Press” on Sunday (March 11), Bloomberg reported Warren said the bill doesn’t help consumers.
“I don’t think a bill like that is good for anybody in America,” she said on the NBC show, emphasizing that the bill would make it easier for banks to discriminate in the home mortgage market and hit minorities with excessive fees. The report noted that on the Senate floor last week, Warren proposed 17 amendments to the bill, which she said hurts consumer protections.
On CNN’s “State of the Union,” Warren said the bill “puts us at greater risk that there will be another taxpayer bailout. That there will be another crash,” and warned on “Fox News Sunday” that Americans shouldn’t forget that millions of people in the U.S. lost their jobs, homes and retirement savings in the 2008 Great Recession.