The Senate will take up a bipartisan bill this week that could ease some of the banking rules in the infamous Dodd-Frank reform bill that passed in 2010. Yes, there are some Democrats willing to give the GOP the votes it needs to push it forward.
Last week, Senate Majority Leader Mitch McConnell filed cloture on the bill. So this week the Senate will vote to stop debate on the bill and pass it.
From The Washington Post:
The core of the new bill exempts about two dozen financial companies with assets between $50 billion and $250 billion from the highest levels of scrutiny by the Federal Reserve, the nation’s central bank. Supporters argue that the legislation would bring much-needed relief to midsize and regional banks that were treated like their much larger counterparts under the 2010 legislation known as Dodd-Frank. Opponents say it would weaken the oversight needed to stave off the type of dangerous lending and investing that brought the U.S. economy to its knees.
Currently, regulations “requires banks to hold a certain level of capital on their balance sheets based on their total asset size, regardless of how risky those assets are.” The New York Times explained that “cash or customer deposits held at the Federal Reserve are treated the same as riskier assets like subprime mortgages or junk bonds.” Officials implemented this rule as a way to stop “banks from being able to take big risks without properly preparing for a disaster.”
The firms freed from these regulations include American Express, SunTrust Banks, and Fifth Third Bank. Bloomberg said some of the losers in this deal include Capital One Finacial and PNC Financial Services Group.
But some of those big evil banks the left bashes will receive a few benefits in the bill. It will “allow big banks to include municipal bonds in required stockpiles of assets that could be sold to provide funding in a crisis.”
The Dodd-Frank bill received its name from its sponsors: former Sen. Chris Dodd (D-CT) and former Rep. Barney Frank (D-MA). The Washington Post noted that Frank opposes this new bill, but acknowledged “that it leaves the major protections of Dodd-Frank in place.” He, like some others, have pushed to adjust Dodd-Frank needs some adjusting. He also does not think that this bill will lead to another financial crisis.
Back in 2010, almost all the Senate Democrats voted for Dodd-Frank, but now some have changed their minds as the party faces a tough midterm this year. The GOP only has a one seat majority in the chamber and the Democrats don’t want to give them more of an edge.
Senate Banking Committee member John Tester (D-MT) has given his support of the bill. He also pointed out that the reforms from 2010 has caused “banks in his largely rural state” to go out of business. Tester said these banks didn’t cause the 2008 financial crisis yet they faced punishment and heavy regulations.
Other moderate Democrat senators that join Tester include Heidi Heitkamp (ND) and Joe Donnelly (IN). All three face re-election in November. All three come from states that chose President Donald Trump over failed Democrat presidential candidate Hillary Clinton.
All three worked with Banking Committee Chairman Mark Crapo (R-ID) to craft this bill.
Frank also said that he’d rather have these three senators “vote for the legislation and get reelected in November than vote against it and lose.” He believes if they lose re-election than the people will “get a much worse bill.”
You know what shocked me, though? I saw that Hillary’s running mate Sen. Tim Kaine (D-VA) even supports this bill along with Mark Warner (D-VA). Both of them helped author the Dodd-Frank reform bill.
But to no one’s surprise, Sen. Elizabeth Warren (D-MA) has railed against the bill:
“On the 10th anniversary of an enormous financial crash, Congress should not be passing laws to roll back regulations on Wall Street banks,” Sen. Elizabeth Warren (D-Mass.) said in an interview. “The bill permits about 25 of the 40 largest banks in America to escape heightened scrutiny and to be regulated as if they were tiny little community banks that could have no impact on the economy.”
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