Overnight Finance: Tough start for highway deal; Dodd-Frank at five

Overnight Finance: Tough start for highway deal; Dodd-Frank at five

HAPPENING NOW: SENATE BLOCKS HIGHWAY BILL. The Senate failed to move forward with legislation authorizing highway funding for six years after Democrats objected that they had yet to see the bill's details in a 41 - 56 vote. More soon...

TOMORROW STARTS TONIGHT: BARNEY FRANK -- FIVE YEARS AFTER DODD-FRANK. Earlier today, I caught up with former-Rep. Barney Frank at a forum hosted by the center-left think tank Third Way to talk about all things Dodd-Frank. My exclusive on-camera interview (I'll have more tomorrow, but I'm on deadline!):

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1.) On Glass-Steagall: "I do think further steps are wise, as Hillary ClintonHillary Rodham ClintonIndependent investigation into Russian interference needed Obama and Trump haven’t talked since inauguration Perez, Ellison start multistate ‘turnaround tour’ for Dems MORE has talked about, for de-complicating some of these large financial institutions. But going to [Glass-Steagall] and doing that in a uniform way that applies to every financial institution is not the best way to do it... Even if we did Glass-Steagall, you'd still have institutions that are too big to fail.

2.) On President Clinton's role in the 2008 crisis: "I think there was a general national failure to understand the importance of new regulation. I think some of the people -- his appointees -- were wrong."

3.) On whether or not 'Too Big to Fail' is over: "The answer is yes, it's over. Too big to fail meant that if an institution was so large that its inability to pay its debts was going to cause systemic reverberations the federal government would have to pay its debts." He said that Dodd-Frank requires the federal government now to take over a failing financial firm, meaning it would "no longer be a private institution." "Given that, how is it not over?" Frank asked. 

-- FULL INTERVIEW: http://bit.ly/1Mj7V4e

-- The Hill's Pete Schroeder has the state-of-play in Congress on Dodd-Frank's fifth anniversary: http://bit.ly/1JvxvOb

THIS IS OVERNIGHT FINANCE, and it's only Tuesday. Tweet: @kevcirilli; email: kcirilli@thehill.com; and subscribe: http://thehill.com/signup/48.

TUNE IN: I'll be on Fox News tonight with Greta van Susteren discussing the latest political headlines.

SCOOP: SHELBY ATTACHING REG RELIEF BILL TO APPROPS TOMORROW, via me: Senate Banking Committee Chairman Richard Shelby (R-Ala.) is looking to attach sweeping legislation to overhaul financial regulations to an appropriations bill that a Senate subcommittee is scheduled to take up for consideration on Wednesday.

Sen. John BoozmanJohn BoozmanSenate Republicans eyeing alternative tax reform plan Lawmakers fundraise amid rising town hall pressure A guide to the committees: Senate MORE (R-Ark.) will likely include Shelby's proposal in the Financial Services and General Government Appropriations Bill that is slated for a Wednesday markup, according to two sources familiar with the plans.

"We expect this bill to be the same or substantially similar to the Senate Banking Committee passed bill," said one financial services source familiar with the plan. "Further, we expect an attempt to remove the language Thursday at full committee. Our understanding is the votes are there on the majority side to prevent its removal."

Shelby has been tight-lipped about his proposal, which would reflect the biggest regulatory update in the financial sector since passage of the 2010 Dodd-Frank Wall Street Reform law five years ago. Democrats oppose the plan. Story: http://bit.ly/1HPrr31

QUOTABLE, Senate Banking Committee Chairman Richard Shelby (R-Ala.) speaking at Heritage Foundation earlier today: "I voted against the repeal of Glass-Steagall [in 1999]. The question is can you put it back on the shelf. It'd be difficult to do."

Back to highway...

HIGHWAY BILL BLOCKED -- POSSIBLE WEEKEND VOTE, via Jordain Carney: "In a 41-56 vote, the Senate voted against proceeding to a bill that will be used as a vehicle for the six-year highway deal brokered by Senate Majority Leader Mitch McConnellMitch McConnellMcConnell’s gambit to save the Supreme Court paid off Overnight Healthcare: High drama for ObamaCare vote | Freedom Caucus chair 'optimistic' about deal | Trump woos right High drama for ObamaCare vote MORE (R-Ky.) and Sen. Barbara BoxerBarbara BoxerAnother day, another dollar for retirement advice rip-offs Carly Fiorina 'certainly looking at' Virginia Senate run Top Obama adviser signs with Hollywood talent agency: report MORE (D-Calif.). Sixty votes were needed to move forward. Democrats weren't alone in voicing opposition. Several Republicans, including Sens. Mike LeeMike LeeHealthcare fight pits Trump against Club for Growth Republicans should seize the moment and repeal ObamaCare now ObamaCare repeal faces last obstacle before House vote MORE (Utah), Ted CruzTed CruzTrump defends several unsubstantiated claims in interview Budowsky: Trump’s war against truth Five takeaways from Labor pick’s confirmation hearing MORE (Texas), Richard Shelby (Ala.) and Bob CorkerBob CorkerRand Paul roils the Senate with NATO blockade Lawmakers want Trump commitment to help Iraq post-ISIS Trump needs a united front to win overseas MORE (Tenn.), also voted against the procedural motion.

"The vote represents a bad start for the McConnell-Boxer deal, but doesn't mean the death of the legislation. McConnell immediately after the vote said he understood many Democrats wanted more time to consider the 1,030-page bill, which he said was now available for review." http://bit.ly/1Mnb6J0

SCOOP: BANKING INDUSTRY TARGETS HIGHWAY PAY-FOR, via me: The banking industry is vehemently opposing one mechanism Senate Majority Leader Mitch McConnell (R-Ky.) and Sen. Barbara Boxer (D-Calif.) want to pay for their six-year highway transportation bill.

McConnell and Boxer's multi-year transportation deal seeks to offset $16.3 billion of the $50 billion needed by lowering the interest rate off dividends banks purchase from the Federal Reserve.

Three quick points:

1.) THE POLICY BEHIND THE POLITICS: Currently, banks must purchase stock at the Federal Reserve in order to become a member. But they receive a 6 percent interest rate on their investment. McConnell and Boxer want to slash that rate to 1.5 percent for banks that have more than $1 billion in consolidated assets, while keeping the 6 percent interest rate for banks under the $1 billion threshold, according to the draft.

2.) BANKS PREP FOR BATTLE: The top banking industry groups -- including the American Bankers Association, the Financial Services Roundtable, the Financial Services Forum and the Independent Community Bankers of America -- sent a letter last week to Senate leadership urging them to abandon the pay-for.

3.) YELLEN SIDES WITH BANKS: Federal Reserve Chairwoman Janet Yellen raised concerns about the issue earlier this month when she testified before the Senate Banking Committee. "I would be concerned that reducing the dividend could have unintended consequences for banks willingness to be part of the Federal Reserve system -- and this might particularly apply to smaller institutions," Yellen said. "This is a change to the law the could conceivably have unintended consequences and I think it deserves some serious thought and analysis." Story: http://bit.ly/1Mj7lDC

FIDUCIARY FIGHT - - BIZ COMMUNITY PROPOSES NEW PLAN. Former Republican presidential candidate Tim Pawlenty is touting a new plan that he says will better protect consumers that would be at risk from the Department of Labor's proposed fiduciary requirements for financial advisers.

"Of course, financial advisors should act in their client's best interest but it shouldn't require new uncertainty and miles of added red tape to accomplish such a common sense and obvious goal," said Pawlenty, who is the head of the Financial Services Roundtable (FSR), in a statement. "FSR urged the DoL to instead adopt FSR's 'SIMPLE' proposal which is intended to accomplish a client best-interest standard in a more straight-forward manner."

-- QUICK Q: WHAT IS 'SIMPLE' PLAN? Pawlenty's FSR explains: FSR's Simple Investment Management Principles and Expectations ("SIMPLE") proposal requires financial professionals and institutions to put their customers' interests first and allows advisors to receive only reasonable compensation for their services. It also requires financial professionals and institutions to provide customers with clear and concise disclosures in "plain English", and it further empowers regulators to hold financial advisors and their companies accountable for any violation of rules.

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