Frustration mounts as Dodd-Frank rollback stalls

Frustration mounts as Dodd-Frank rollback stalls
© Greg Nash

Banks and credit unions desperate for regulatory relief are ramping up pressure on House Republicans to quickly pass a bill easing Dodd-Frank banking rules.

The Senate earlier this month cleared a bipartisan bill that would exempt dozens of lenders from stricter federal oversight, sending it to the House.

The measure is a longtime goal of Republicans and the financial services industry. But Speaker Paul RyanPaul Davis RyanGOP super PAC drops .5 million on Nevada ad campaign Blue wave poses governing risks for Dems Dems seek to rebuild blue wall in Rust Belt contests MORE (R-Wis.) is keeping the bill off the House floor until senators agree to add on a slew of banking reforms that have passed the lower chamber.

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Senators are resisting any changes to the bill, arguing their bill is the result of hard-fought negotiations and the best chance for sweeping bipartisan reform of Dodd-Frank.

The deadlock has lobbyists for the banking industry and credit unions growing increasingly frustrated with the House. They plan to raise pressure during the two-week Easter recess for the House to take up the bill.

“It shouldn't be a hostage situation,” said Paul Merski, executive vice president of congressional relations for the Independent Community Bankers of America. “It should be a process of how to make law, not make perpetual arguments.”

Advocates for the Senate bill argue that delaying the measure could cost lenders millions of dollars in compliance fees and risk missing the best chance yet to roll back Dodd-Frank.

The bill would exempt dozens of banks from stricter Federal Reserve oversight under Dodd-Frank. The measure from Senate Banking Committee Chairman Mike CrapoMichael (Mike) Dean CrapoHillicon Valley: Trump signs off on sanctions for election meddlers | Russian hacker pleads guilty over botnet | Reddit bans QAnon forum | FCC delays review of T-Mobile, Sprint merger | EU approves controversial copyright law Trump authorizes sanctions against foreign governments that interfere in US elections Cruz gets help from Senate GOP in face of serious challenge from O’Rourke MORE (R-Idaho) was sponsored by a dozen Democrats and is one of the few major policy overhauls of 2018 to receive bipartisan support.

Senators backing the Crapo bill warned the House not to tamper with the fragile deal and urged them to send it to President TrumpDonald John TrumpTrump rallies in Nevada amid Supreme Court flurry: 'We're gonna get Brett' Trump: 'Good news' that Obama is campaigning again Trump boosts Heller, hammers 'Wacky Jacky' opponent in Nevada MORE without delay.

Senate Democrats vowed to abandon the bill if House Financial Services Committee Chairman Jeb HensarlingThomas (Jeb) Jeb HensarlingMidterms to shake up top posts on House finance panel Kavanaugh hires attorney amid sexual assault allegations: report Did Congress just settle for less than best plan to reform housing finance? MORE (R-Texas), a staunch conservative, added any changes.

A day after the Senate bill passed, Hensarling told reporters that Ryan, a close ally, would freeze the bipartisan deal “unless and until they’re willing to negotiate with the House.”

He said there were dozens of uncontroversial Financial Services panel bills the Senate could add to their package without issue.

Sarah Flaim, a spokeswoman for Hensarling, said the chairman offered to negotiate the inclusion of some of those bills before the Senate measure was passed, but his offer was denied.

"We have yet to see any Senate Democrats explain what they find objectionable about the overwhelmingly bipartisan and pro-growth House provisions we’re advocating for," Flaim said.

The financial industry is trying to break the jam. They now fear the bill could die with little time for Congress to act before attention shifts to the midterm elections.

It’s unclear how much longer the Senate bill could remain in limbo — or how much time House leadership will give Hensarling to strike up talks.

Bank lobbyists told The Hill that Senate GOP leaders do not want to spend fleeting time on a bill that already ate up two weeks.

The bill’s backers also fear that mounting liberal attacks on moderate Democrats backing the measure or a massive banking scandal could kill support for rolling back financial rules.

“The longer you take to think through the process, the more perilous the potential outcome is,” said Jim Nussle, president of the Credit Union National Association and a former Republican chairman of the House Budget Committee.

“It would probably be to our benefit to see the process move as quickly as possible and have the House take the Senate bill.”

Lawmakers will spend the next two weeks in their home states, and trade groups backing the bill plan to enlist local community banks and credit unions in a pressure campaign.

The bill’s backers say the House shouldn’t spoil the best chance yet to rein in Dodd-Frank.

“Chairman Crapo pulled off a small miracle to get a Dodd-Frank reform bill through with bipartisan support,” Merski said. “We’re not giving up on the momentum from the strong Senate vote.”

The goal is to convince House lawmakers to push Ryan and Hensarling into holding a vote on the Senate bill once they return to Washington in April.

“That might change the pressure Hensarling faces internally on this,” said a bank lobbyist.

The Senate bill’s sponsors tout it as overdue regulatory relief for small community banks and credit unions crushed by Dodd-Frank, and a rare bipartisan achievement from a broken Congress.

The bill passed 67-31 despite fierce criticism from progressive senators that highlighted divisions among Democrats. Many Democrats supporting the bill hail from red states and are up for reelection this year.

“I’m not sure they could get 67 votes to declare the sky is blue,” Nussle said. “It’s not only the best chance for Dodd-Frank reform and financial services, but it my be the best chance for starting to break gridlock.” 

Hensarling’s efforts to get more changes have rankled bank lobbyists who were already skeptical of his ability to get a Dodd-Frank rollback to Trump’s desk.

As chairman of the Financial Services panel, Hensarling was the architect of the Choice Act, the House GOP’s sweeping Dodd-Frank rewrite. The bill passed the House in 2017, but was deemed dead on arrival in the Senate, where any measure to revise the law needed some Democratic support.

Financial industry groups criticized Hensarling for pushing what they considered a GOP wish list over a viable bill.

Senators had spent years working on a bipartisan deal that could avert a Democratic filibuster and clear the House, and banked on the lower chamber’s GOP majority approving the result.

Hitting a new obstacle so close to the finish line has supporters exasperated.

“Anyone who’s trying to add anything to this bill, the question is 'where have you been for the past four years?' " Merski said.

Hensarling's team say he's just trying to include the will of the House in the Senate bill, and isn't looking to push his Choice Act.

"Chairman Hensarling is not asking to negotiate the Financial Choice Act," Flaim said.

"He’s asking for senators to sit down and negotiate with the House on the nearly three dozen strong bipartisan bills — including bills sponsored by Democrats."

This story was updated on March 26 at 11:50 a.m.