Tensions Run High as Dodd-Frank Rollback Bill Nears Senate Vote
- Author: Joey Payne Mar 10, 2018,
Mar 10, 2018, 0:43
The Senate debate comes as Wall Street awaits the next big boost for bank stocks, following the tax legislation President Trump signed into law in December. Crippling regulations saddled smaller banks, forcing American consumers to market with fewer investment vehicles and greater costs.
The proposed changes for the midsize banks include less stringent regulations on submitting plans for winding down if they fail (plans known as "living wills"); looser liquidity rules, which mandate that banks have easy access to safe capital in case their loans go south; and less frequent "stress tests", which gauge how prepared a bank is for a financial crisis.
It's been 10 years since the global financial crisis severely damaged the nation's economy, and the Senate is on the brink of passing legislation that would roll back Obama-era rules Congress enacted to prevent another collapse. "Now is the time to take on the greed and power of Wall Street and break up the largest financial institutions in the country".
However, as with any major reform, the law also had some unintended consequences.
May said the Dodd-Frank Act is too restrictive and hurts small, community banks even though they didn't play much of a role in the housing crisis almost 10 years ago. "We've seen the regulation bleed down".
Warren complained that one provision of the bill "changes one word, the Fed "shall" tailor the rules, instead of 'may.'" With "that one-word change", she said, "banks can sue the Fed if they don't weaken the rules the way they want". "I think the House understands that, and I think the White House understands that". Specifically, the senator said in June 2017 she would consider easing restrictions on small, community banks.
Tester, however, said Senate Democrats would abandon the bill if House lawmakers add more radical de-regulatory language. And if we could put that extra dollar into our capital, we could lend it back out into the community on a tenfold basis.
"Congress's appetite for pulling back bank regulations shows the renewed clout of the financial sector in Washington, not just in the GOP but also among Democrats". The senator sent an email to her constituents Friday lambasting her Republican and Democratic colleagues for backing the bill, claiming they are selling out to industry lobbyists and bankers. "Now all of a sudden I can look tactically at acquisitions of banks for $10 to $50 billion".
The Senate bill seeks to maintain core consumer protections while also granting relief to small and mid-size lenders.
Allows consumers to get one free year of fraud alerts, which will help consumers who have been impacted by situations like the Wells Fargo scandal or whose identities or personal information has been stolen.
She had a dozen amendments "ready to go", she said, including one to impose mandatory penalties on companies like Equifax when they lose consumer data and one to prohibit employers from requesting credit reports as part of job applications.
The legislation was introduced in November after years of bipartisan negotiations among Sen. Heidi Heitkamp, D-N.D. "We tend to throw the baby out with the bathwater with that kind of frustration".