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GOP attaches financial regs overhaul to Senate spending bill

GOP attaches financial regs overhaul to Senate spending bill
© Greg Nash

Senate Republicans have attached to a spending bill controversial legislation that would implement a sweeping overhaul of the financial regulatory system.

The attached measure is the text of an authorization bill that the Senate Banking Committee advanced in a party-line vote in May. Sen. Richard Shelby (R-Ala.), chairman of the Banking panel and an appropriator, sponsors the measure.

Shelby’s portion of the $20.6 billion spending bill would allow for more regional and community banks to be exempt from regulations imposed by the 2010 Dodd-Frank Wall Street financial reform law in an effort to provide regulatory relief to businesses.

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Sen. John BoozmanJohn Nichols BoozmanSenate GOP opens door to earmarks Arkansas governor quietly bucking GOP's dive into culture wars Trump allies line up ahead of potentially bruising primaries MORE (R-Ark.) attached the entire text of Shelby’s authorization bill to the fiscal 2016 Financial Services and General Government funding measure.

In a statement, Shelby called the move "another step in the process of moving a sensible proposal forward" on financial reform.

"I believe that there is a growing consensus that the community and regional financial institutions that fuel economic growth in our communities must get relief from unnecessary regulation. We must also take steps to improve accountability and transparency in the post Dodd-Frank world," he said.

The subcommittee advanced the bill Wednesday, and the full committee is scheduled to mark it up on Thursday.

Democrats said the language would weaken the ability of bank regulators to protect market users and investors against unscrupulous practices.

Sen. Chris CoonsChris Andrew CoonsBiden to go one-on-one with Manchin US, Iran signal possible breakthroughs in nuke talks How the United States can pass Civics 101 MORE (Del.), the top Democrat on the subcommittee, slammed the bill and said “I cannot support it without significant changes.”

“I’m particularly disappointed that this bill tries to dismantle Wall Street reforms that have helped protect consumers and stop reckless risk-taking,” Coons said. “By underfunding regulators and undermining the Consumer Financial Protection Bureau’s independence, this bill would take a dangerous step backward for the safety and soundness of our markets and our economy’s security.”

This comes months after Republicans attached a swaps provision to the 2015 spending package that passed last December that allows banks to directly engage in derivatives trading and seeks to roll back Dodd-Frank, which was signed into law five years ago.

While that provision was enacted, it nearly jeopardized the deal after a group of House Democrats demanded that it be dropped.

Overall, the spending bill is $1.3 billion below current levels and $4 billion below President Obama’s request.

The bill would cut $470 million from the Internal Revenue Service, cut $934 million from the General Services Administration and cuts $20 million from the Federal Communications Commission.

Republicans have included a $163 million increase for federal courts and $24 million more than current levels to the Office of Personnel Management to address information technology security vulnerabilities in the wake of the government-wide cybersecurity hack that has affected millions of federal employees. A summary of the bill said it fully funds Obama’s request for IT security improvements at the OPM.

The bill would bring the Consumer Financial Protection Bureau under the congressional appropriations process and would block the FCC from implementing net neutrality. The new net neutrality regulations seek to prevent Internet providers from blocking, slowing or otherwise interfering with people's unfettered access to the Web.

While the House Appropriations Committee has already advanced its version of the Financial Services spending bill, House GOP leaders have stopped bringing spending bills to the floor and recently pulled that particular bill from the floor schedule.

Democrats are demanding that Republicans hold budget negotiations to lift sequestration budget ceilings, but GOP leaders have so far rejected those requests. 

Congress must fund the government by Oct. 1.

— Kevin Cirilli contributed.