A bipartisan bill that's on the Senate floor this week would increase the odds of government funding going to bail out failed banks, according to a new report from the Congressional Budget Office. It would also amend the Bank Holding Company Act of 1956 to exempt banks with assets valued at less than $10 billion from the Volcker Rule, and it would also amend the U.S. Housing Act of 1937 to reduce inspection requirements and environmental-review requirements for certain smaller, rural public-housing agencies.
The Massachusetts Democrat, who worked with the Obama administration on banking industry regulations after the 2008 financial meltdown, raised concerns about how the legislation could impact USA consumers and the economy during a Capitol Hill news conference.
The first procedural vote to roll back critical parts of the 2010 Dodd-Frank Act - the Wall Street reform bill signed into law by former President Barack Obama - is expected to pass the upper chamber within days.
Under the bill being debated by the Senate, banks would not have to factor in the deposits they hold at a central bank when calculating that ratio.
"Let's say you and I are a regional bank, and we have a $100-$125 billion of assets", CFRA analyst Ken Leon said.
Democrats in the US Senate are taking a moderate amount of heat for joining forces with Republicans to support a Dodd-Frank rollback.
The House Financial Services Committee chairman says the House banking bill Congress is working on this week is a "recalibration" of the banking regulations known as Dodd-Frank that will help community banks and credit unions increase capitalization. "This legislation would make it easier for Hoosier families to gain access to mortgages and small businesses to access capital, and it also includes important new consumer protections, such as free credit freezes, in response to the Equifax data breach". The Wall Street crash of 2008 showed the American people how fraudulent many of these large banks are.
Democratic senators who are facing re-election this year in states won by Donald J. Trump in 2016 have been especially supportive of the bill, but on Tuesday they said politics was not a factor. Twenty-five of the 38 largest US banks would no longer be subjected to more stringent capital and liquidity rules, enhanced risk-management standards and other stronger regulations that Dodd-Frank enacted.
Other co-sponsors come from purple states, like Tim Kaine and Mark Warner of Virginia, Michael Bennet of Colorado, and Gary Peters of MI. Bernie Sanders, I-Vt., said in a statement. "But I believe a outcome of it has been to accelerate consolidation of banks". Now, just about 10 years after the financial crisis that destroyed millions of jobs and devastated the country, Republicans want to weaken Dodd-Frank and unleash some of the banks' worst tendencies.
"The bill before us this week will continue to unwind the damage caused by an administration and Democrat-run Congress that kept its foot firmly on the brake of the American economy", McConnell said. That means more than two dozen banks would be shielded from some of the Federal Reserve's oversight.
"This bill is all about the big banks", she said, adding that the bill raises the risk of another financial meltdown.
The House approved a bill easing banking restrictions in June and any proposal that passes out of the Senate would have to be reconciled before landing on the president's desk.