Senate Advances Bill to Loosen Banking Rules, Revealing Democratic Split

  • Senate Advances Bill to Loosen Banking Rules, Revealing Democratic Split

Senate Advances Bill to Loosen Banking Rules, Revealing Democratic Split

Sen. Elizabeth Warren (D-MA), a proponent of financial regulation and consumer protection, said the bill is about "fulfilling the wish lists of big bank lobbyists".

Democrats in the US Senate are taking a moderate amount of heat for joining forces with Republicans to support a Dodd-Frank rollback.

Republicans overwhelmingly support rolling back key aspects of Dodd-Frank, the law that brought significant changes to financial regulation over the last decade.

Republican and Democratic senators have one major target on the agenda this week: Retooling the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Without close monitoring of these banks, we'll increase the risk that the banking system will collapse-again.

Valliere opined that it is Frank's concession that has persuaded over a dozen Democrats to support the bill, which he said "may win 65 to 70 votes in the Senate and has equally strong support in the House".

Ahead of Tuesday's vote, Warren told reporters she planned to introduce a dozen amendments to the bill to shore up protections for consumers.

Democrats are divided on the bill.

Sen. Warren pledged to have three days' worth of floor debate, with each day focusing on a particular theme.

"Most of the community banks' loans have been and have always been market-quality loans", May said. The vote to open up debate on the bill - which now has 12 Democratic co-sponsors and one independent who caucuses with Democrats - was 67-32.

Spokespersons for Sen. Mike Crapo, R-Idaho, the bill's lead sponsor and chairman of the Banking Committee, were not immediately available to comment on the report.

The possibility came up because the centrepiece of the bill is the loosening of some of the tougher Dodd-Frank requirements for banks with between $50 billion and $250 billion in assets, a provision meant to provide relief to regional banks like Suntrust or Fifth Third Bank that are large but quite different from Wall Street megabanks.

George W. Ferriell, president and CEO of a small agricultural community bank in Bath, said his staff has been spending more time in the office, reviewing regulations, than out in the field with customers.

"I am not going to let this legislative history be papered with misconceptions of this bill", Heitkamp said.

"This bill is all about the big banks", she said, adding that the bill raises the risk of another financial meltdown. Four years after the passage of Dodd-Frank, the number of small banks, which provide almost half of the banking industry's small business loans despite holding less than 20 percent of its assets, had declined by 14.1 percent. The Federal Reserve still could impose requirements on the institutions in the $100-250 billion range. It would undermine fair lending rules created to counteract race discrimination and weaken the Volcker rule, which limits a bank's ability to make speculative trades with federally insured deposits. "People in this building may forget the devastating impact of the financial crisis 10 years ago-but the American people have not forgotten", she said. The bipartisan group is also toying with the idea of easing liquidity reserve requirements for large banks, which were instituted after the Great Recession to ensure large lending institutions had enough capital on hand to help ease the burden of a financial crisis or episode.

The rule would also relieve many banks of the responsibility of putting together so-called "living wills", or the plans that detail how a bank would dissolve, if it needed to, without dragging the economy down with it.

The House passed a more comprehensive financial deregulation bill previous year, but senators are hopeful that the House will accept the bill that they approve with only minor changes.