WASHINGTON — A decade after the global financial crisis tipped the United States into a recession, Congress agreed on Tuesday to free thousands of small and medium-sized banks from strict rules that had been enacted as part of the 2010 Dodd-Frank law to prevent another meltdown.
In a rare demonstration of bipartisanship, the House voted 258-159 to approve a regulatory rollback that passed the Senate this year, handing a significant victory to President Trump, who has promised to “do a big number on Dodd-Frank.”
The bill stops far short of unwinding the toughened regulatory regime put in place to prevent the nation’s biggest banks from engaging in risky behavior, but it represents a substantial watering down of Obama-era rules governing a large swath of the banking system. The legislation will leave fewer than 10 big banks in the United States subject to stricter federal oversight, freeing thousands of banks with less than $250 billion in assets from a post-crisis crackdown that they have long complained is too onerous.
Republican lawmakers and the banking industry cheered a measure they said would help unshackle banks — and the economy — from regulatory burdens.
Paul D. Ryan, the House Speaker and Wisconsin Republican, said the bill’s passage was a step toward “freeing our economy from overregulation.”
“Our smaller banks are engines of growth,” he said in a statement. “By lending to small businesses and offering banking services for consumers, these institutions are and will remain vital for millions of Americans who participate in our economy.”
The push to alter even a portion of Dodd-Frank so soon after the crisis and just ahead of the midterm elections has pitted Democratic lawmakers against one another. Party leaders are eager to present a united front to voters in November and are wary of losing a signature issue — holding Wall Street accountable.
“It’s a bad bill under the guise of helping community banks,” Representative Nancy Pelosi of California, the Democratic minority leader, said during debate on the House floor on Tuesday. “The bill would take us back to the days when unchecked recklessness on Wall Street ignited an historic financial meltdown.”
The Dodd-Frank bill was a Democrat-led initiative that passed with the support of just three Republicans and it has been under constant attack from Republicans ever since. Left-leaning lawmakers like Senator Elizabeth Warren of Massachusetts and Senator Sherrod Brown of Ohio have blasted their more moderate colleagues, like Heidi Heitkamp of North Dakota, for supporting the legislation, and Democratic leaders have tried to prevent any lawmakers from crossing the aisle to support the bill.
Originally Posted
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The New York Times on May 22, 2018 by Alan Rappeport and Emily Flitter.
