Senate votes to loosen key Dodd-Frank banking regulations

Orrin Hatch: The road to responsible financial reform

One the one hand, the banking deregulation bill championed by Republican Senate Banking Committee chair Mike Crapo has garnered the support of a solid group of centrist Democrats who see it as a way to ease restrictions on smaller community banks. A bill that rolls back parts of Dodd-Frank may yet help its main tenets hold steadier over the long term.

Dodd-Frank was originally meant to increase transparency by implementing a consistent set of regulations aimed at closing loopholes and making firms accountable for their own mistakes. This bipartisan bill applies lessons learned from the last eight years under Dodd-Frank to right-size existing regulations while maintaining the safety and soundness of the financial system. Dodd-Frank promised to "end too big to fail" and "promote financial stability".

Buried within new Senate legislation to roll back restraints on banks is a provision that would exempt an estimated 85 percent of all USA banks and credit unions from some public reporting requirements, raising fears that discriminatory practices by lenders could go undetected.

The Senate bill would change that, letting small banks and credit unions obtain the legal protections without having to meet all the guidelines.

Its opponents, including small to mid-sized banks, community banks and other financial institutions, say the regulation has inhibited growth and is overly complex. Furthermore, banks that originate less than 500 mortgages a year would have relaxed reporting requirements for racial and income data.

For city dwellers or those living in metropolitan areas, getting a mortgage is not much of an issue since there are plenty of national banks easily accessible.

So-called "moderate" Democrats are supporting the bipartisan legislation that would ease some of the tough Dodd-Frank banking regulations, giving some breathing room for local banks. "Regional and traditional lenders and our communities have been disadvantaged by a regulatory model that lumps us together with the largest, most complex banks".

"I have some concerns about the banking bill", Van Hollen told Business Insider. For example, requiring banks with more than $100 billion to report "stress tests" to the Federal Reserve Bank.

"Mortgage discrimination is real in America", Warren said Monday in remarks on the Senate floor. It is time for the House of Representatives to take up the Senate bill and provide commonsense regulatory relief for the American people.

Liberal Democrats in the Senate are highly critical of that provision, saying it gives a pass to many large regional banks, not just smaller community banks for whom the exception is intended.

The Dodd-Frank act was brought in with the aim of avoiding another financial meltdown.

Trump's administration applauded the Senate's move Wednesday, championing it as a win for small and community banks subjected to burdensome regulations for almost a decade. It has sent 18 bills to the House to repeal or fix it.

The bill makes a fivefold increase, to $250 billion, in the level of assets at which banks are deemed to pose a potential threat if they failed.

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