In the next week, the Senate is expected to pass the Economic Growth, Regulatory Relief, and Consumer Protection Act, a bill that rolls back some of Dodd-Frank's financial regulations and widens existing loopholes.
Republicans drafted the bill. But it has 12 Democratic cosponsors, giving it a filibuster-proof majority.
The legislation exempts banks with less than $10 billion in assets from the Volcker rule (which bars commercial banks from some speculative trades) and various mortgage requirements; allows banks with between $50 billion and $250 billion in assets to operate with less regulatory scrutiny; and directs the Federal Reserve to tailor regulations to the specific balance sheets of the bigger banks, rather than enforcing rules equally across-the-board.
Most Democrats don't like the bill. But in my conversations, they don't see it as an enormously consequential rollback of their Wall Street reforms, either.
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"I would vote against this bill," says former Rep. Barney Frank, a Democrat who helped spearhead the namesake Dodd-Frank Act. "But I understand the pressure to vote for it, and I don't think the bill makes a serious dent in what we did."
Behind this legislation lies the view that Dodd-Frank is an onerous hassle for community and regional banks, neither of which were major players in the financial crisis. Some Democrats, including Frank, have long been willing to amend these portions of the original bill. Frank previously supported raising the threshold for tighter regulation from $50 billion to $100 billion and giving more leeway to local banks, for instance.
Those banks are powerful. Most members of Congress don't have Goldman Sachs headquartered in their state or district. But pretty much every member of Congress represents a raft of smaller banks that play key roles in their community. "The politics here are driven by banks with $10 billion in assets and under," says Frank. "They're in everyone's district. It's not campaign contributions that drive this. It's that everyone has four or five or 12 community banks. They're everyone's friends."
But Republicans went much further in drafting the bill than Frank and supporters of Dodd-Frank would've preferred.