A measure aiming to rollback significant portions of legislation enacted in 2010 following the 2008 financial crisis passed the U.S. Senate on Wednesday.
The motion was sponsored by Sen. Mike Crapo (R-Idaho), who described its merits:
“This bill has received widespread support for good reason: the cycle of lending and job creation has been stifled by onerous regulation.”
In a 67–31 vote, Congress’ upper chamber passed Senate Bill 2155 to ease Dodd-Frank regulation imposed on the financial industry, particularly small and mid-sized banks.
If passed, the new bill will offer relief from tough Obama-era regulations in several critical areas.
Under current law, smaller financial institutions with assets under $50 billion are required to routinely submit to detailed financial and risk exams. The Senate repeal measure would free over 5,000 banks from oversight by raising the asset minimum to $250 billion.
Although less of a boon for larger banks, financial institutions with assets above $250 billion benefit: Reversing Obama-era rules, larger banks would be able to buy banks from state and local governments.
Further, for larger banks, the capital requirement for financial institutions which hold assets would be lowered.
Outside of regulation lifted on the banking industry, mortgage lenders with assets under $10 billion would be exempt from underwriting rules, provided they hold assets instead of selling to Wall Street.
Moreover, banks which oversee less than 500 mortgages annually would no longer be required to report racial and income data, unless the institution is found to engage in discriminatory lending practices.
In order to qualify to have regulations lifted, housing firms Fannie Mae and Freddie Mac would have to rely on alternative credit scoring firms other than FICO.
The Senate bill, however, does not neglect consumer protection: It seeks to combat identity fraud, ensures individuals’ credit information is protected, protects whistleblowers, and borrowers’ credit history
While legislative efforts have slogged in Congress on an issue President Trump vowed action, some House Republicans remain skeptical despite the bill’s bipartisan tone.
Fearing the Senate version of the long-awaited repeal did not go far enough to strip away Obama-era regulation, House Financial Services Committee Chairman Jeb Hensarling (R-Texas), said neither his panel nor the House would “rubber-stamp” the Senate version.
“The bill is staying on the speaker’s desk unless and until they negotiate with the House,” Hensarling said.
Despite the Senate version earning the support of 13 Democrats, Sen. Joe Donnelly (D-Ind.) has warned if House Republicans go much further in cutting regulation no legislation regarding Dodd-Frank will be passed.
[Reuters] [Washington Post] [The Hill] [Photo courtesy REUTERS/Brendan McDermid via MSNBC]