Democrats join GOP on Dodd-Frank bill
Proposal would roll back scrutiny of some smaller banks
WASHINGTON — The Senate is preparing to scale back the sweeping banking regulations passed after the 2008 financial crisis, with more than a dozen Democrats ready to give Republicans the votes they need to weaken one of President Barack Obama’s largest legislative achievements.
Congress’ 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.
Eight years after nearly every Senate Democrat backed a sweeping set of new rules for financial firms large and small, the party is now split, with moderates, several of them facing tough midterm election contests, working with the opposing party.
The core of the new bill exempts about two dozen Sen. Jon Tester, D-Mont., says regulations have helped force some banks out of business. financial companies with assets between $50 billion and $250 billion from the highest levels of scrutiny by the Federal Reserve, the nation’s central bank. Supporters argue that the legislation would bring muchneeded relief to midsize and regional banks that were treated like their much larger counterparts under the 2010 legislation known as Dodd-Frank. Opponents say it would weaken the oversight needed to stave off the type of dangerous lending and investing that brought the U.S. economy to its knees.
The Senate is slated to take an initial procedural vote this week to move the measure forward.
“On the 10th anniversary of an enormous financial crash, Congress should not be passing laws to roll back regulations on Wall Street banks,” Sen. Elizabeth Warren, D-Mass., said. “The bill permits about 25 of the 40 largest banks in America to escape heightened scrutiny and to be regulated as if they were tiny little community banks that could have no impact on the economy.”
Sen. Jon Tester, D-Mont., a Banking Committee member and one of the new bill’s leading Democratic supporters, said banks in his largely rural state have been going out of business in part because of the regulations imposed by Dodd-Frank.
Critics dispute those claims, echoing a Democratic Party schism over financial regulations that pits liberals such as Warren and top Banking Committee Democrat Sherrod Brown, D- Ohio, against moderate-leaning Democrats including Tester and Sens. Heidi Heitkamp, N.D., and Joe Donnelly, Ind.
Many of the moderates face political pressure to establish a centrist voting record, particularly after voting against the GOP tax cuts in December. Tester, Heitkamp and Donnelly are all up for re-election in November in states President Donald Trump won by large margins. All three helped negotiate the banking legislation with its GOP sponsor, Banking Committee Chairman Mike Crapo, R-Idaho.
Yet the coalition of Democrats supporting the bill also includes lawmakers such as Tim Kaine, Va., Hillary Clinton’s running mate in the 2016 election, and Mark Warner, Va., who was among the lead authors of the 2010 law but also voiced concerns about overregulating smaller banks.
Financial firms upped their campaign contributions to key Senate Democrats over the last year.