Economic Growth, Regulatory Relief, and Consumer Protection Act - S.2155
Work continues this week in the Senate on a bipartisan financial deregulation measure (S 2155) that got held up last week as Republicans and Democrats fought over which of the 141 amendments filed so far will be heard. Bill sponsor Michael D. Crapo, R-Idaho, is seeking to manage additions to the legislation without losing the votes of a dozen Democratic co-sponsors
What's in the bill? Besides changing the asset threshold for more stringent Fed regulation from $50 billion to $250 billion, the legislation would exempt banks with less than $10 billion in assets from the Volcker rule, which bars federally insured banks from trading with depositors' money. One of the most criticized features of the bill was its exclusion of financial institutions that have made fewer than 500 mortgages a year for the past two years from a Dodd-Frank requirement to provide additional data to regulators. Some of that data was meant to help determine whether a bank used discriminatory lending practices.
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A plan to scale back post-financial-crisis banking rules cleared a key Senate hurdle Tuesday, with Republicans and more than a dozen Democrats voting to move the measure forward.
The Senate voted 67 to 32 to move toward debate on the measure, well over the 60 votes needed in the closely divided Senate. Days of contentious debate loom before final passage, with Sen. Elizabeth Warren (D-Mass.) pledging to deliver speeches in opposition. But the level of bipartisan support Tuesday suggested the measure will eventually get the Senate’s approval.
Republicans and Democrats in the Senate are poised to pass a bill, S. 2155 (115), this week that would relax key banking regulations, steamrolling opposition from outspoken liberals like Sen. Elizabeth Warren who have built their careers calling for tougher oversight of Wall Street.
A core group of moderate Democrats is brushing off an escalating opposition campaign by the Massachusetts senator and other progressives like Sen. Sherrod Brown of Ohio, instead joining with GOP colleagues to reverse restrictions on large and small banks that were enacted in the wake of the 2008 financial meltdown.
For the bill’s supporters, the legislation is a chance to show voters that it’s still possible to get things done in an often paralyzed Congress. They include at least 12 Democrats, several of whom face tough reelection campaigns in states that President Donald Trump won in 2016.
"I hope that our bipartisan work can rub off on the rest of Congress so we can break through the partisan gridlock that has plagued Washington for too long," said Sen. Jon Tester of Montana, one of the Democrats who has negotiated the bill.
As supporters work to attract even more votes from Democrats, they argue that the bill would right-size post-crisis rules imposed on small and regional lenders and help make it easier for them to provide credit.
Still, most Senate Democrats are expected to oppose the legislation, including Minority Leader Chuck Schumer, who announced his opposition Friday afternoon after declining for months to take a public position on the divisive issue.
“There will be a split in the caucus,” said Sen. Mark Warner (D-Va.), who was also part of the group that negotiated the legislation. "But I believe we’ll get between 65 and 70 votes.”
The bill marks the biggest legislative change to banking industry oversight since Democrats enacted the Dodd-Frank Act, the historic 2010 law that imposed reams of new rules on lenders after the global financial crisis. The first procedural vote on the bill is scheduled for Tuesday.
Yet while the ink was still drying on Dodd-Frank, the seeds of the bill on the floor this week were being planted.
“Literally, from the night of the conference on Dodd-Frank, there have been discussions about the need to go in and make some fixes,” said Senate Banking Chairman Mike Crapo, the lead author of the deregulation bill.
“Almost absolute resistance” by President Barack Obama and former Senate Majority Leader Harry Reid stopped it from happening sooner, Crapo said. Trump has pledged to scale back Dodd-Frank and is expected to sign the bill once it hits his desk.
Obama and Reid themselves faced pressure from Warren, who in 2014 tried to rally support for shutting down the government over a Dodd-Frank rollback that was slipped into a must-pass appropriations bill.
She was unsuccessful in stopping the repeal from becoming law, though the event illustrated the leverage she could wield by focusing her millions of followers on fighting attempts to deregulate the finance industry.
But even after that event, centrist Democrats began negotiating with Crapo and other Republicans on the proposals that are about to appear on the Senate floor.
“We have been negotiating for about four years,” said Crapo, who has irked conservatives and big banks such as Citigroup and Capital One by compromising in the talks. “We’ve been working toward those areas where we have been able to find consensus. This year it came together.”
The bill would make numerous changes to safeguards sitting between lenders, consumers and the broader economy.
Among the provisions: Easier mortgage regulations for small banks; new exemptions from tougher oversight for regional banks with $50 billion to $250 billion in assets; a directive to the Federal Reserve to tailor its rules for large banks and relaxed capital and liquidity requirements for some of the nation's biggest financial institutions.
The legislation includes a handful of consumer protection measures that critics have panned as an insufficient trade-off for the regulatory rollbacks in the bill.
One is a proposal pushed by Delaware Democrats Tom Carper and Chris Coons that would require free credit monitoring for military members.
The provision has rankled credit-reporting agencies that will be forced to offer millions of dollars worth of free products, as well as conservatives such as Grover Norquist of Americans for Tax Reform, who has complained to Crapo that the proposal would expose the credit-reporting companies to "new liability which the trial bar will certainly try to exploit."
Sen. Richard Shelby (R-Ala.) has concerns with the provision and hasn't decided whether he will support the bill, a source familiar with his thinking said.
While Warren will likely be unsuccessful in stopping the package, she is again trying to activate her base to fight it.
On Friday, she sent an email to supporters in which she attacked “Republicans AND Democrats" for supporting the bill. She warned that “the bank lobbyists are getting ready to pop champagne and light their cigars.” Warren is expected to offer amendments that could force her colleagues to take tough positions as they stick together to defend the bill and avoid fracturing the political coalition underpinning it.
“To me this bill says it all about how Washington works,” Warren said in an interview. “This is Washington working for the rich and powerful, not for the American people.”
While the bill has enough support to escape a filibuster, aides and lobbyists identified a handful of additional Democrats beyond the legislation's co-sponsors who could potentially support it. They include Sens. Jeanne Shaheen (D-N.H.), Maggie Hassan (D-N.H.), Amy Klobuchar (D-Minn.), Bill Nelson (D-Fla.) and Tammy Duckworth (D-Ill.).
For the team of moderate Democrats who have been negotiating with Crapo and other Republicans, it’s a positive story in which they will likely have the upper hand when the Senate votes to pass the bill. In addition to Warner and Tester, Sens. Heidi Heitkamp (D-N.D.) and Joe Donnelly (D-Ind.) have been trying to assemble the bill for years.
Democrats who support the legislation are proud they were able to convince colleagues to get over the stigma around reopening Dodd-Frank, a signature achievement of Obama's.
They won’t be shy about attending a signing ceremony with Trump, whom their constituents helped send to the White House.
"I would not understate the influence of Elizabeth Warren, but in this particular case, on this particular bill, what's prevailing is the pretty strong belief of this group of moderate Democrats and also their political survival," Capital Alpha Partners Director Ian Katz said. "If you're running for reelection in states like Indiana, North Dakota and Montana, which Trump won very decisively, agreeing with Elizabeth Warren isn't necessarily helpful."
