House votes to roll back Dodd-Frank law

WASHINGTON — The House on Thursday voted to free Wall Street from 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 all together under the legislation approved along party lines.

The largely party-line vote to roll back the DoddFrank Act was 233-186, as Republicans argued the rules designed to prevent another meltdown were making it harder for community banks to lend and hampered the economy. The law is named after former Senate Banking Committee Chairman Sen. Christopher Dodd, DConn., and former House Financial Services Committee Chairman Rep. Barney Frank, D-Mass.

“Our community banks are in trouble,” said Speaker Paul Ryan, R-Wis. “They are being crushed by the costly rules imposed on them by the Dodd-Frank Act. This law may have had good intentions but its consequences have been dire for Main Street.”

The Trump administration backed the bill as part of a multi-pronged effort to ease banking regulations in order to spur economic growth. The 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 banks need more, not less, oversight, 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 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.

Rep. Steny Hoyer, D-Md., said the bill “takes the referee off the field one more time” and called it a dangerous piece of legislation. “All we’re doing is spending our time taking away protections for the American people and their futures,” said Hoyer. “Have we learned nothing?”

The bill, introduced by Rep. Jeb Hensarling, RTexas, 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 the 2010 law, giving community and regional banks a reprieve from many regulations, for example.

The bill has little chance of passing through the Senate, where Republican leadership would need to attract Democratic support.