Democrats Pitch in to Roll Back Dodd-Frank

The Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) passed the Senate Wednesday on a bipartisan basis. Sixteen 16 Democrats and one independent joined 50 Republicans in voting "yes."  The bill rolls back some of the provisions of the 2009 Dodd-Frank Wall Street Reform and Consumer Protection Act, especially some of the regulations aimed at smaller banks.

The bill must now pass the House, where Financial Services Committee Chairman Jeb Hensarling (R-TX) has demanded many of the bills loosening other regulations that earlier passed the House be included in the Senate version. The President has already announced he will sign whatever passes both chambers.

The bill raises the size of institutions deemed systemically important, i.e. "too big to fail," from $50 billion to $250 billion, relieving many local and some regional banks from stricter Federal Reserve supervision.  In addition, restrictions on trading with their own capitol contained in the Volker Rule would no longer apply to banks with less than $10 billion in assets and the provision in the rule that keeps hedge funds from sharing names with affiliated banks was eliminated completely.

The vote was delayed at one point on Wednesday to allow the Senate to review and debate more than 100 last-minute amendments, so the final content of the bill are not totally clear. Among those that did pass, according to a release from the Mortgage Bankers association were, "SAFE Act amendments which provide mortgage loan originators with 120 days of transitional authority to originate when moving from a federal depository to a non-bank (or across state lines), subjecting Property Assessed Clean Lending (PACE) or property retrofit loans to Truth In Lending Act consumer protections, extending critical consumer protections to U.S. veterans who use the VA Home Loan program, clarifying the High Volatility Commercial Real Estate rule to help promote sustainable construction and development, and targeted TILA/RESPA Integrated Disclosure fixes."

Among the measures that Hensarling says he will insist be added to the bill before house passage is one that would except banks with less than $50 billion in assets from Consumer Financial Protection Bureau supervision.

Democrats who voted for the measure have, in many cases, been strongly criticized by their peers for doing so.  Several have stated they will not vote for any bill that emerges from the process to reconcile the House and Senate versions if substantial changes are made to the latter.  With John McCain (R-AZ) not available to vote, some Democratic support is necessary to pass anything in the Senate.