On March 14th, the US Senate passed the “Economic Growth, Regulatory Relief, and Consumer Protection Act” by a vote of 67 for and 31 against to reform the Dodd-Frank banking bill of 2010. Twelve Democrats and one independent joined the Republican majority to pass the bill. Sponsored by Senate Banking Committee Chairman Mike Crapo (R-ID), the bill aims to reduce the regulatory burden on small and mid-sized banks that was imposed following the Great Recession.
The bill reduces mortgage rules for institutions that provide fewer than 500 loans a year. Banks with less than $10 billion in assets would also see fewer regulations like the Volker rule, which limits the risky investments that banks can make.
The bill also reduces the oversight and regulations the Federal Reserve can impose on banks that hold less than $250 billion in assets, with some exceptions for international banks. The current lower regulatory threshold is at $50 billion. While the authors of the Dodd-Frank reform, like former Congressman Barney Frank (D-MA), thought that the threshold should be raised to a number higher than $50 billion to help smaller banks, they have argued that $250 billion is too high.
Many Democrats, like Senator Mark Warner (D-VA), believed that reform was necessary, as “Congress never gets major legislation 100 percent right the first time… parts of Dodd-Frank intended to prevent banks from becoming ‘too-big-to-fail’ have actually made some community banks and credit unions ‘too-small-to-succeed.’”
However, other Democrats like Senator Elizabeth Warren (D-MA) voted against the bill, arguing “The bank lobbyists are getting ready to pop champagne and light their cigars” in celebration for the bill.
Notably, the bill followed what many people call “regular order”. Chairman Crapo held hearings on the bill, and initially tried to craft the bill with Ranking Member Sherrod Brown (D-OH), and continued to work with centrist Democrats even after negotiations with Senator Brown stalled. The bill saw 44 amendments negotiated in committee and even received bipartisan amendments from senators who opposed the bill, like an amendment from Senator Robert Menendez (D-NJ) and Senator Tim Scott (R-SC) to “to streamline and improve a family self-sufficiency program”.
This bill’s passage follows a similar, but more partisan, bill that was passed by the House of Representatives. It is unclear whether the House will pass the measure, as following the Senate’s passage House Financial Services Committee Chairman Jeb Hensarling (R-TX) said “We are not rubber-stamping the [Senate] bill. It’s got to be bipartisan and bicameral.”
The White House issued a statement of support for the bill, indicating that if a compromise measure passes Congress it is likely to be enacted into law.