Senate Democrats Help Advance Bill That Could Increase Risk Of Financial Crisis

  • Senate Democrats Help Advance Bill That Could Increase Risk Of Financial Crisis

Senate Democrats Help Advance Bill That Could Increase Risk Of Financial Crisis

Democratic Senator Elizabeth Warren promised to fight a U.S. Senate bill easing bank rules introduced following the 2007-2009 global financial crisis as the chamber moved on Tuesday to begin debating the draft bipartisan legislation.

As the bill stands now - and its language could change if the big banks' lobbying efforts are successful - the largest banks would still be subject to the Federal Reserve's stress tests.

US Senate Majority Leader Mitch McConnell has set the stage for a vote on one of the biggest rewrites of financial industry rules since the Dodd-Frank Act was passed almost eight years ago. "CBO estimates that the probability is small under current law and would be slightly greater under the legislation". Now, just about 10 years after the financial crisis that destroyed millions of jobs and devastated the country, Republicans want to weaken Dodd-Frank and unleash some of the banks' worst tendencies.

Valliere opined that it is Frank's concession that has persuaded over a dozen Democrats to support the bill, which he said "may win 65 to 70 votes in the Senate and has equally strong support in the House".

"There are places where we should do targeted changes in laws and regulations to make sure community banks don't have to endure regulations", Warren said in 2017 at the Wall Street Journal CFO Network Annual Meeting.

Senate Banking Committee member John Tester (D-MT) has given his support of the bill. Elizabeth Warren, D-Mass., blamed the bank's sway over Republican lawmakers in the House of Representatives for almost shutting down the government.

"Most of the community banks' loans have been and have always been market-quality loans", May said. In a 67-32 vote, senators cleared the way for the bill to proceed.

McConnell filed a motion on Thursday to advance legislation sponsored by Senate Banking Committee chairman Mike Crapo that would bring regional banks and other financial firms regulatory relief that they've sought for years.

Warren questioned during her Tuesday press briefing why 11 of her Democratic colleagues supported the bill, which they say will help community banks.

Contending that the language could be "the single most risky provision in the bill", Warren offered that such pressure on the Federal Reserve could result in a "systematic weakening of the rules for all the big banks". Four years after the passage of Dodd-Frank, the number of small banks, which provide almost half of the banking industry's small business loans despite holding less than 20 percent of its assets, had declined by 14.1 percent.

"I don't see that trend changing with this new bill", May said.

The Senate legislation increases from $50 billion to $250 billion the threshold at which banks are considered critical to the system. It would undermine fair lending rules created to counteract race discrimination and weaken the Volcker rule, which limits a bank's ability to make speculative trades with federally insured deposits. Warren said that is the case because lobbyists have convinced lawmakers that it's a good bill. The Senate bill would raise to $250 billion from $50 billion the asset threshold for banks to be subjected to stricter Federal Reserve supervision for systemically important financial institutions. The bill's supporters anxious adopting the amendments - many of them consumer protections - would cause the underlying bipartisan agreement to break apart. Tester said these banks didn't cause the 2008 financial crisis yet they faced punishment and heavy regulations.

The rule would also relieve many banks of the responsibility of putting together so-called "living wills", or the plans that detail how a bank would dissolve, if it needed to, without dragging the economy down with it.