Decision 2020

House poised to approve plan to loosen federal banking regulations

With Republicans unable to muster the votes to repeal a major financial regulation law put in the place after the 2008 Wall Street Collapse, the House on Tuesday is expected to give final approval to a less sweeping plan already backed by the Senate, which would ease a series of financial rules and regulations on smaller banking institutions enacted under the 2010 Dodd-Frank law.

“The cycle of lending and job creation has been stifled by onerous regulation,” said Sen. Mike Crapo (R-ID), who shepherded the bill through the Senate with bipartisan support, and then prevailed on House Republicans to simply accept the plan, instead of trying to make changes which might have doomed the bill’s chances.

“I’m happy to say we’re in the final stages of making these bills law,” said Rep. Rob Woodall (R-GA), as a House panel moved to set up Tuesday’s debate on the banking regulation changes.

+ Banks with less than $250 billion in assets would no longer be subjected to federal "stress tests" – the current threshold is $50 billion.
+ Eases regulatory requirements on banks with less than $10 billion in assets (mainly known as 'community banks')
+ Loosens minimum standards on certain home mortgage loans, with a goal of allowing more small banks and credit unions to make such loans.
+ The plan steps up protections for veterans on predatory loans.
+ Active duty service members would get additional protections from foreclosures.
+ Consumers would be eligible in some cases for unlimited credit security freezes to deal with credit fraud alerts.

As in the debate earlier this year in the Senate, more liberal Democrats in the House have sternly argued against the bill, making the case that it takes away too many protections enacted in the original 2010 Dodd-Frank law.

“Defeating this legislation is important to preventing Wall Street from crashing our economy again,” said Rep. Pramila Jaypal (D-WA).

“We must not allow the GOP Congress to drag us back to the same lack of oversight that ignited the Great Recession,” wrote House Democratic Leader Nancy Pelosi and Rep. Maxine Waters (D-CA) to their colleagues.

Consumer watchdog groups like Public Citizen have labeled the bill, the “Bank Lobbyist Act,” arguing it would increase chances for ‘another taxpayer bailout of reckless financial institutions.’

But while the progressive wing of the Democratic Party has objected, other Democrats heard the pleas of small community and regional banks, one reason the Senate voted 67-31 to approve the bill earlier this year.

“It is no coincidence that the bills Democratic sponsors come not from major financial hubs, but rural areas where small banks provide a disproportionate share of loans,” said Sen. Michael Bennet (D-CO).

While the bill falls well short of the repeal of Dodd-Frank which had been sought by many Republicans, it is still a plus for the GOP, giving President Trump one more item to sign into law, one more bullet point to rattle off for supporters on achievements during his time in office.

“This bill will provide long overdue relief from the regulatory behemoth that is Dodd-Frank,” said Rep. Blaine Leutkemeyer (R-NE), as Republicans said the changes would spur new economic growth, by helping businesses gain access to new credit.

A section-by-section summary of the bill is available here.

You can see the text of the 196 page bill here.