House OKs bill to ease banking rules

voted The to Housefree Wall on Street Thursdayfrom many of the strict constraints put in place after the 2008 financial crisis, the opening salvo in what is likely to be a protracted battle over deregulation of the powerful banking industry.

Big banks, from Goldman Sachs to Bank of America, would face less scrutiny, and other large financial institutions, such as insurance giant MetLife, could escape tougher rules altogether under the legislation approved along party lines.

The administration of President Donald Trump backed the bill as part of a multipronged effort to ease banking regulations in order to spur economic growth. The proposed legislation is likely to face stiff resistance in the Senate, but it provides a road map of sorts for the policies the president plans to put in place as he appoints new regulators. Trump, who has complained about tight lending practices, has ordered three reviews of banking rules, the first of which Treasury Secretary Steven Mnuchin is set to deliver as soon as next week.

Democrats and progressive groups, who argue that banks need more oversight, not less, are preparing to use the issue to animate supporters still angry that Wall Street banks have not paid a bigger price for the financial crisis. Many have expressed particular concern over a provision that would curtail the powers of the Consumer Financial Protection Bureau and reduce its independence

by having its director report to the president.

The bill, introduced by Rep. Jeb Hensarling, R-Texas, offers the country’s nearly 6,000 banks a choice: If they want to avoid many of the regulatory burdens imposed during the Obama administration, they must significantly increase their emergency financial cushion. That way, even if they run into financial trouble, the banks should have enough money to survive without taxpayers’ help, supporters of the bill say.

It also eases many of the regulations called for under President Barack Obama administration’s 2010 financialoverhaul law, known as DoddFrank, giving community and regional banks a reprieve from many regulations, for example.

The bill, known as the Financial Choice Act, has little chance of passing in its current form through the Senate, where Republican leadership would need to attract Democratic support. Still, it is a critical part of the Trump administration’s multifront effort to ease banking industry regulations and could set the terms of a potentially explosive debate on whether, nearly a decade after the recession, the banking industry is laboring under too many constraints.

“I think people are too dismissive of this bill being DOA [dead on arrival] in the Senate,” said Marcus Stanley, policy director for Americans for Financial Reform. “We are concerned about pieces of the Choice Act being taken up in the Senate.”

Trump has said bank regulators went too far after the financial crisis in cracking down on lending practices, creating an environment that has made it hard for businesses and consumers to get loans. If banks can lend more money, it will help the economy grow and create more jobs, the White House has said.

House Speaker Paul Ryan, R-Wis., tweeted Thursday, “Let me put it this way: #DoddFrank is more than a thousand pages long and has more rules and regulations than any other Obama-era law.”

Democrats have pushed back against this idea, though, saying the banking industry needs more oversight, not less. The Financial Choice Act would allow the conditions for the next financial crisis to fester, Democrats say, noting that American banks earned record profits last year despite government regulations.

“This bill is a vehicle for Donald Trump’s agenda to deregulate and help out Wall Street,” said Rep. Maxine Waters, D-Calif.