Tensions Run High as Dodd-Frank Rollback Bill Nears Senate Vote

Tensions Run High as Dodd-Frank Rollback Bill Nears Senate Vote

The bill, sponsored by Senate Banking Committee Chairman Mike Crapo, R-Idaho, is expected to easily clear a filibuster. Sen. Lawmakers in the Republican-led House would still need to approve the measure before it comes law.

Texas Republican Rep. Jeb Hensarling tells CNN Tuesday the bill also helps smaller banks.

The bill would also change how the "supplementary leverage ratio" is calculated, a key capital requirement for the biggest banks that was created to ensure those financial institutions could handle a financial disaster.

The legislation exempts almost a dozen financial companies with assets between $50 billion and $250 billion from enhanced scrutiny by the Federal Reserve. Lawmakers are intent on easing those rules for midsize and large regional banks, asserting that would boost lending and the economy.

Warren said the move would benefit the larger players in the financial industry.

May said the Dodd-Frank Act is too restrictive and hurts small, community banks even though they didn't play much of a role in the housing crisis almost 10 years ago.

Congress, she argued "should listen to the American people and refuse to pass this bill". "The millions of people who lost their homes; the millions of people who lost their jobs; the millions of people who lost their savings, they remember and they do not want to turn lose the big banks again".

It also exempts banks with less than $10 billion in assets from rules banning proprietary trading.

Cutting It Close                     Source Federal Reserve 2017 Comprehensive Capital Analysis and Review            
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Cutting It Close Source Federal Reserve 2017 Comprehensive Capital Analysis and Review .cha

May welcomes any effort to help small banks, though.

By using the passage of Dodd-Frank as some kind of reference date, is Warner suggesting that the closure of a bank a month or so after Dodd-Frank became law can be blamed on Dodd-Frank?

He later added: "You'll see this rhetoric that this going back to the bad old days, and this is, say, a giveaway to the big banks. And it should not be regulated like a community bank", Warren said.

I poked some fun yesterday at how JPMorgan Chase and Bank of America appear to be ignoring consumer trends in their push to expand the brick-and-mortar branch networks.

"While we believe that the best solution is to remove an arbitrary test and replace it with the Federal Reserve's business model review", their letter said, "we appreciate the significant change proposed in S. 2155 that better matches regulations to a firm's risk profile". "And that pressure on the Fed will lead to a systematic weakening of the rules for all the big banks".

Case in point: The bill's provisions to lift the asset threshold for enhanced prudential standards and supervision from $50 billion to $250 billion "would substantially reduce oversight over 25 of the nation's 38 largest banks, including institutions of over $100 billion in assets that were deemed "too big to fail" in 2009". The Congressional Budget Office on Monday said the odds the banks would get their way stood at 50%, according to reports.

The CBO estimated that the probability a systematically important financial institution will fail "is small under current law and would be slightly greater under the legislation".

Sen. Elizabeth Warren, D-Mass., said during a Tuesday morning press briefing that the bill "increases the chances of another bailout" and vowed to "fight back" this week as the legislation is debated on the Senate floor.

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