Monday, 16 July, 2018

Warren vows fight as US Senate begins debate on Dodd-Frank rewrite

With banking reform bill Main Street won't suffer for Wall Street's sins Warren vows fight as US Senate begins debate on Dodd-Frank rewrite
Melinda Barton | 08 March, 2018, 01:37

Tensions are running high as the Dodd-Frank rollback bill, S. 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act, created to deregulate the banking industry is up for a Senate vote this week.

During a Senate Banking Committee hearing, Powell told proponents of the bill, which is expected to be considered next week, that it wouldn't lessen Fed oversight of those global banks.

In a rare showing of bipartisanship, 13 Democrats - many of whom are facing tough midterm election contests this year - also support the bill. Warner. "Virginia's community banks and credit unions did not cause the financial crisis, and they should not be held back by regulations intended for the big banks".

Angelides, who served as chairman of the Financial Crisis Inquiry Commission (from 2009 to 2011), which conducted the US inquiry into the causes of the 2008 financial crisis, told Senate Banking Committee Chairman Mike Crapo, R-Idaho - the bill's sponsor - in a Monday letter that he was "deeply troubled" by the potential passage of S. 2155.

Financial experts have expressed concern about bumping up the threshold to $250 billion, including former Federal Reserve Governor Daniel Tarullo. Such banks are subject to stricter regulations and lawmakers want to provide them relief in hopes that it will boost lending and the economy.

She added: "People in this building may forget the devastating impact of the financial crisis 10 years ago - but the American people have not forgotten". 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.

She was joined in her rebuke of the legislation by Vermont senator Bernie Sanders, who said in a statement: "Now is not the time to deregulate banks that have more than $3.5tn in assets and lay the groundwork for another massive financial collapse". As it is now worded, it would most likely apply to just three banks, all of which take deposits primarily from large asset managers and other banks, rather than Main Street customers, and are known as custody banks.

Although the bill is supposed to benefit small banks, the CBO said it's possible that JP Morgan and Citibank, specifically, would benefit from changes to the way that regulators measure capitalization for banks that are "predominantly engaged in custody, safekeeping, and asset servicing activities". There, the authors propose a key change to how megabanks calculate the cash-on-hand figures required to meet Dodd-Frank's capital requirements.

"S. 2155 (the rollback bill) offers much-needed relief for our nation's almost 5,700 community banks to promote localized lending and economic growth", ICBA CEO Camden Fine said.

"Let's say you and I are a regional bank, and we have a $100-$125 billion of assets", CFRA analyst Ken Leon said.

"This bipartisan legislation is a common-sense approach that maintains regulatory authority but makes reasonable changes that allow traditional lenders to better meet the credit needs of the people and businesses in our rural and urban markets", said the letter to Banking Committee Chairman Mike Crapo, R-Idaho, and Sen. The rules would make it easier for big banks to buy municipal bonds, the Wall Street Journal noted.

Contending that the language could be "the single most unsafe provision in the bill", Warren offered that such pressure on the Federal Reserve could result in a "systematic weakening of the rules for all the big banks".

Progressive Democrats also seized on a report by the Congressional Budget Office released Monday evening that showed the bill would increase the federal deficit by $671 million and increase the likelihood a Wall Street mega-bank will fail. The probability of those events is deemed to be small under current law. "That's just fundamentally wrong".

They include language that would impose mandatory penalties on companies like Equifax when they lose consumer data or prohibit rolling back the rules on any big bank that got more than $1 billion in bailout money after the 2008 crash.

Warren, widely viewed as a presidential contender in 2020, said she would do everything she could to stop the bill passing the Senate.