Senate votes to end debate on Dodd-Frank rollback

Senate votes to end debate on Dodd-Frank rollback
© Greg Nash

The Senate voted to advance Wednesday the most sweeping bipartisan changes yet to the Dodd-Frank Wall Street reform bill enacted by President Obama after the 2007 financial crisis.

In a 67-31 vote, the Senate ended debate on the bill after approving a series of changes meant to counter liberal criticisms and win over skeptical House conservatives.

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All Republicans and more than a dozen Democrats voted to move the bill toward a vote on final passage, which is scheduled for Wednesday evening.

The bill, long expected to pass the Senate, faces an uncertain future in the House, where conservatives are demanding stronger curbs to Dodd-Frank before pledging their support.

It also inflamed divisions among Democrats between moderates who back the compromise and liberals who accused their colleagues of caving to bank lobbyists.

The bill from Senate Banking Committee Chairman Mike CrapoMichael (Mike) Dean CrapoSenate Dems want watchdog to probe if SEC official tried to pressure bank on gun policies Community development impact remains clear with NMTC post-tax reform Overnight Finance: Trump signs Dodd-Frank rollback | Snubs key Dems at ceremony | Senate confirms banking regulator | Lawmakers lash out on Trump auto tariffs MORE (R-Idaho) exempts dozens of banks from tougher Federal Reserve oversight and frees smaller firms from regulations intended to prevent mortgage fraud and discrimination.

Senators backing the bill have called it desperately needed relief for small banks that would help boost commerce in lagging rural economies, while liberal critics claim the bill is gift to Wall Street wrapped in false claims of salvation for smaller lenders.

Banks with less than $250 billion in global assets would no longer be subject to yearly Fed stress tests or higher capital requirements meant to ensure risky firms could weather a lending crisis. Those banks would also be exempt from submitting for Fed approval a “living will” that outlines how the company could be liquidated upon failure without causing a widespread meltdown.

The threshold for tighter Fed regulation is currently set at $50 billion, and the increase would free several major regional banks, including SunTrust, BB&T, Citizens, Fifth Third, M&T and BMO Financial Corp., from those standards. Those banks all have at least $100 billion in assets, and among the bill’s biggest beneficiaries.

The bill also exempts banks that extend 500 or fewer mortgages a year from reporting some home loan data to federal regulators and broadens the definition of qualified mortgages.

Senators also voted 67 to 31 on Wednesday to approve a set of changes to the bill, many meant to dispel liberal criticisms of the measure.

The amendment clarifies that foreign banks with U.S. holdings less than $250 billion but above that level in foreign assets would still be subject to closer oversight. It also targets a provision loosening a rule on the ratio of capital to debt a bank must hold, one of the few provisions with a direct impact on Wall Street firms.

Provisions to force credit bureaus to offer free services for victims of hacks, protect military veterans from fraud, create new student loan backstops, and mandate studies on various risks to the financial system were also added to the bill.

Senators filed more than 100 other amendments to the bill, but party leaders have failed to reach a deal on which of those would get floor votes. Sponsors of the bill have resisted major changes over fears they could ruin the delicate bipartisan deal.

Even so, opposition to the deal from a key House chairman could prevent the bill from reaching President TrumpDonald John TrumpEx-ethics chief calls on Trump to end 'monstrous' migrant policies Laura Bush blasts Trump migrant policy as 'cruel' and 'immoral' US denies report of coalition airstrike on Syria MORE.

Rep. Jeb HensarlingThomas (Jeb) Jeb HensarlingBank regulator: Review after Wells Fargo scandal failed to find industry-wide fraud Five ways Mulvaney is cracking down on his own agency Trump signs Dodd-Frank rollback MORE (R-Texas), chairman of the House Financial Services Committee, said he's not holding talks with key senators on making changes to the bill. K Street sources told The Hill that the measure faces a growing chance of dying in the House unless senators agree to go to a conference with the House.

Democrats backing the bill have opposed reopening the bill with the House.

"There are some out there who say 'this bill is going to look completely different when it comes back from the House.' It may. If it does, than I guess we're done," said Sen. Jon TesterJonathan (Jon) TesterTrump signs VA reform bill without Democratic co-author The Hill's Morning Report — Sponsored by PhRMA — Primary results give both parties hopes for November GOP support growing for anti-Trump trade bill MORE (D-Mont.) last week.

"I believe we have the White House's support on it. And hopefully they'll influence the House not to screw it up."