IS THERE STILL HOPE FOR REG REFORM?
Discussions among members of the Senate Banking Committee may have broken down, but a group of moderate Democrats may hold the key to saving the reg reform credit unions so desperately want.
WASHINGTON — DISCUSSIONS ON A REGulatory relief package between the top Democrat and Republican on the Senate Banking Committee broke down late Tuesday night, but members from both sides of the aisle remain hopeful that they can reach a bipartisan deal.
Chairman Mike Crapo and Sen. Sherrod Brown, D-ohio, the panel’s ranking member, have been discussing ways to reform parts of the Doddfrank Act since the beginning of the year with initial optimism that they could come to an agreement. However, it appears that what Republicans wanted was too much for Brown, who is one of the Senate’s more progressive members.
“I care about helping the small banks and the credit unions, but I wasn’t willing to gut consumer protections to do it,” Brown said in an interview.
But now with talks between Crapo and Brown being scrapped, moderate Democrats on the banking panel, including Sen. Heidi Heitkamp, D-N.D., plan to negotiate directly with Crapo. Yet it still remains unclear if they would be able to bring along other Democrats to support such a deal. A central piece of regulatory relief dis-
cussions is whether and how much to raise the $50 billion asset threshold qualifying “systemically important” banks for tougher supervision, or whether to abandon a hard numeric threshold altogether.
“I have long said that I am going to do everything that I can to achieve a bipartisan analysis that helps my community banks and my credit unions and I have not eliminated that goal,” Heitkamp said. “I continue to have that goal, and look forward to ongoing conversations.”
Despite the breakdown in talks, the mood in much of the credit union advocacy community remained positive -- or at least optimistic.
“This is disappointing but not surprising,” said Ryan Donovan, chief advocacy officer with the Credit Union National Association. “And we hope it is not permanent. Bringing about common-sense regulation is a process. We hope both sides will continue to work together to put forth bipartisan legislation that focuses on many of the important issues that impact consumers and small financial institutions, including credit unions.”
ANY DEAL NEEDS 60 VOTES TO PASS
Some lobbyists doubted Brown would agree to a deal that would be amenable to Republicans and believe a package negotiated with moderate Democrats will prove to be more fruitful in rolling back Dodd-frank regulations. However, any deal will need to thread a needle because it will require the support of eight Democrats to get the 60 votes needed to pass, not just the four moderates on the Banking Committee
Crapo said he and Brown “did both work hard and in good faith” but “we were unable to reach an agreement.”
But he said he has already started to negotiate with the moderate Democrats who have expressed a desire to make some Dodd-frank reforms. Besides Heitkamp, other Democrats said to be involved in the talks are Sens. Jon Tester of Montana and Joe Donnelly of Indiana.
It is unclear if Sen. Mark Warner, D-VA., is also part of the discussions, but he is seen as among the committee’s more moderate Democrats.
“I intend to move forward to build a bipartisan solution,” said Crapo, who added he still “hopes” a deal can be made by the end of the year.
Sen. Tim Scott, R-S.C., another member of the committee and a former credit union board member, signaled that Republicans and Democrats might not be too far apart on agreeing on some reforms.
“I think it is really important that we continue to look for ways to work with our friends on the other side to deliver relief from a regulatory standpoint,” said Scott.
Some analysts suggested Brown’s lack of involvement in discussions poses an obstacle to an agreement.
Ian Katz, a policy analyst at Capital Alpha Partners, wrote in a research note the firm has been “contrarian optimists” a Senate regulatory reform deal will include a change to the Doddfrank threshold but that “Brown’s support would have helped bring along a few more Democrats.”
However, it could be easier to come to an agreement now that it’s become clear what Brown will and won’t support.
Regardless of the noise surrounding this bill, Crapo said his objective remains unchanged.
“I want to build a bipartisan bill to achieve significant regulatory reform,” he said.
“I have long said that I am going to do everything that I can to achieve a bipartisan analysis that helps my community banks and my credit unions and I have not eliminated that goal,” said Sen. Heidi Heitkamp, D-N.D.