By J. Preston Carter, J.D., LL.M.
The Senate passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155), which would modify provisions of the Dodd-Frank Act and related laws governing financial services. The measure passed by a vote of 67 to 31 with two senators not voting. It will now move to the House for consideration. A statement from the White House Press Secretary noted that the President supports the bill, and, as recently noted in a Statement of Administration Policy, he would sign it into law.
Senators opposed. In prepared remarks made on the Senate floor, Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) said S. 2155 “weakens stress tests for all large banks” and “opens the door to weaker oversight of foreign mega banks operating in the U.S,” among other problems he saw with the bill. In a separate statement released after the bill was passed, he said that in passing the bill, the Senate had “rolled back accountability measures for some of the biggest domestic and foreign banks at the expense of taxpayers.”
Similarly, House Financial Services Committee Ranking Member Maxine Waters (D-Calif) issued a statement saying the bill “takes our financial system in the wrong direction, and serves as a giveaway to banks that are already posting record profits.” And House Minority Leader Nancy Pelosi (D-Calif) said the Senate had taken “a giant leap backward towards the freewheeling days of the financial crisis.”
Treasury statement. But Treasury Secretary Steven Mnuchin issued a statement saying the Senate had taken “an important step today toward achieving common sense financial regulation” and that the bill would “safeguard American consumers through proper and effective oversight.”
In support. In floor remarks prior to the vote, Senate Majority Leader Mitch McConnell (R-Ky) said the Dodd-Frank Act has become “far too blunt an instrument for regulating our financial system,” Also, Sen. Richard Shelby (R-Ala) voted in support of S. 2155 and said it “brings relief to community banks and credit unions throughout the country.”
Senator Tim Scott (R-SC) said his provisions in the regulatory relief package would “help increase financial security for many low-income and minority families, as well as protect children and families across the country from synthetic identity theft and fraud.”
Senator Heidi Heitkamp (D-ND) said the bill would provide “needed relief for community banks and credit unions so they can support consumers in rural areas like North Dakota, where regulations designed for big banks are making it harder for small lenders to provide mortgages or loans to expand small businesses and family farms.”
Representative Scott Tipton (R-Colo) welcomed the inclusion of his MOBILE Act (H. 1457) in the bill, which, he said, would allow consumers to authorize their bank to use their personal information on their driver’s license or identification card in order to open a bank account on a mobile device. Also, he said the bill “protects consumer privacy information and upholds state privacy laws by requiring a financial institution to delete all copies of the driver’s license after using them for the allowed purpose.”
Advocacy groups. Rob Nichols, American Bankers Association president and CEO, praised passage of the bill, saying it is an “important step in right-sizing the rules for America’s banks.” The Financial Services Roundtable called the bill “a major first step to boost economic growth and help expand opportunity for more Americans.” Independent Community Bankers of America President and CEO Camden R. Fine said, “S. 2155 includes common-sense regulatory relief for our nation’s nearly 5,700 community banks while preserving vital consumer protections and effective regulatory supervision.”
However, according to a U.S. PIRG statement, “There is a strong chance this bill will increase mortgage fraud, racial discrimination, and risky banking practices.” A Public Citizen press release said, “Masquerading as aid for community banks, this legislation reduces oversight of 25 of the largest 38 banks, a group guilty of misconduct and recipients of some $48 billion in bailout money after the 2008 crash. In addition to setting the stage for another taxpayer-funded bailout, this bill also reduces safeguards against discriminatory, predatory lending for some of the most vulnerable consumers.” Also, the Center for Responsible Lending states that S. 2155 “lifts commonsense safeguards, designed to stop banks from again tanking the economy, while also making it easier for financial companies to sell risky mortgages, discriminate against communities of color, and steer manufactured-home owners into more expensive mortgages.”
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