Published: Sat, March 10, 2018
Life&Culture | By Peggy Hughes

Behind the surprise bipartisan push to blunt Dodd-Frank

Behind the surprise bipartisan push to blunt Dodd-Frank

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".

The Senate is preparing to scale back the sweeping banking regulations passed after the 2008 financial crisis, with more than a dozen Democrats ready to give Republicans the votes they need to weaken one of President Barack Obama's largest legislative achievements. Opponents of the bill say numerous banks that will benefit from the bill also got government bailouts and that the looser regulations will once again encourage excessive risk-taking that could end up costing taxpayers.

But Greg Valliere, chief global strategist for Horizon Investments, said in his Tuesday morning Capitol Notes briefing that Warren "doesn't have enough support for her bank-bashing from Democrats, many of whom fear she will be a serious presidential candidate in 2020".

Dodd-Frank was originally meant to increase transparency by implementing a consistent set of regulations aimed at closing loopholes and making firms accountable for their own mistakes.

And JPMorgan and Citigroup have sought to squeeze other benefits from the bill that could meet resistance in Washington. "By streamlining regulations, it will bring relief to the small financial institutions who have been hurt by Dodd-Frank's one-size-fits-all approach", he said. Drafting the letter were Ally Financial, American Express, Bank of the West, BBVA Compass, BMO Financial Corp., Citizens Bank, Comerica Bank, Fifth Third Bancorp, Huntington Bancshares, KeyCorp, M&T Bank Corp., Regions Bank and SunTrust Banks Inc.

Senate liberals opposed to the bill, and some regulatory experts, have charged that global megabanks with U.S. subsidiaries with under $250 billion in assets would also be spared from some of the toughest oversight measures required by Dodd-Frank. "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. He said he has had discussions with Representative Jeb Hensarling, the Texas Republican who leads the House Financial Services Committee, about taking up the bill. He says it's "a very modest recalibration that's going to help community banks and credit unions". "Now supporters of the bill want to strip back some of the rules created to stop that from happening all over again", Warren said.

Democrat of Montana last week at a Senate Banking Committee hearing. Credit Erin Schaff for The New York
Democrat of Montana last week at a Senate Banking Committee hearing. Credit Erin Schaff for The New York

The Senate advanced legislation Tuesday to roll back some of the safeguards Congress put in place to prevent a repeat of the financial crisis.

"My first response to that is this bill is anything but a deregulation of Wall Street", Crapo said.

The Department of the Treasury released a 57-page proposal that did not fully repeal Dodd Frank, keeping a crucial provision that allows the Federal Deposit Insurance Corporation (FDIC) to take control of an insolvent bank and restructure it using federal money.

"Understanding those risks is essential if we are to have a safer financial system than the one we had before the financial crisis", he writes.

House Republicans voted in 2017 to repeal OLA and replace it with a bankruptcy process. If the Senate passes its version, the two chambers will have to arrive at a consensus before the bill heads to President Trump's desk.

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