The US House has voted to roll back regulations imposed by the Dodd-Frank Act. The new law loosens capital requirements for both major and smaller banks. It marks another marquee pro-business triumph for Donald Trump.
The US House of Representatives voted on Tuesday to ease banking regulations introduced in the wake of the 2007-2009 financial crisis.
The new bipartisan legislation will roll back several of the 2010 Dodd-Frank rules that raised capital requirements for banks, including several smaller lenders. The bill also raises the threshold in assets at which banks are considered risky and subject to stricter oversight from $50 billion to $250 billion (€42.5 billion to €212.5 billion).
The bill, which passed in the House by 258 votes to 159, marks the first major rewrite of US financial regulations introduced following the financial crisis.
Supporters of the bill maintain that loosening capital requirements will lead to a boost in lending and spur more economic growth. They also accused Dodd-Frank of hurting smaller lenders who played no role in economic debacle, which ultimately saw US taxpayers bail out the banks to the tune of $700 billion.
Texas Republican Jeb Hensarling, who heads the House Financial Services Committee, said smaller Main Street banks "have been suffering for years under the weight" of the Dodd-Frank regulations. "Today is an important day in the history of economic opportunity in America."
A legislative coup for Trump
Having passed the Senate floor in March, Tuesday's vote in the House now paves the way for US President Donald Trump to sign the bill into law.
Trump has expressed his eagerness to remove major chunks of financial regulatory rules. "We're going to be doing a big number on Dodd-Frank," he promised in the first weeks of his presidency, complaining that the rules were hindering lending and hampering job creation.
Revisions to the Dodd-Frank act will add to Trump's marquee business-friendly legislative achievements, following last year's sweeping tax bill which promised deep cuts for corporations and wealthy individuals, as well as moderate reductions for ordinary earners.
Fears on the Democrat side
While the latest legislation was voted through by a handful of Democrat lawmakers, several critics within the party denounced the move to water down critical rules designed to protect consumers and taxpayers.
Critics also argued that the move to loosen regulation was unnecessary, given the increase in lending and profits boasted by banks since the introduction of Dodd-Frank in 2010.
Figures for the first quarter of 2018 show that US banks' net income climbed to $56 billion — a 27.5 percent increase from the same period last year.
This is not a bill that benefits consumers, Al Green, the Democratic Representative for Dallas, Texas, said on the floor ahead of the vote. "It is a big-bank bonanza."
Backers maintain, however, that key Dodd-Frank provisions making larger banks less risky will remain untouched. For example, the new legislation does not alter the so-called "Volcker Rule," which bans banks from making risky bets with their own money.
Also unaffected is the ability for regulators to apply stricter rules on institutions deemed as crucial to the financial system.
dm/rc (AP, Reuters)