Warren vows fight as US Senate begins debate on Dodd-Frank rewrite

10 March, 2018, 02:03 | Author: Ann Santiago
  • Senate Banking Committee Chairman Sen. Mike Crapo R-Idaho second from left arrives with Treasury Secretary Steven Mnuchin right at the Senate Banking Committee on Capitol Hill in Washington. Ten years after

Sen. Elizabeth Warren, D-Mass., expressed her distaste for a bill that would change portions of the Dodd-Frank financial law Tuesday, saying deregulating the banking industry would harm consumers.

Moderate Democrats who support the legislation rejected Warren's claims, saying on Tuesday it offered critical relief for small and mid-sized lenders and that they expected it to quickly pass the Senate. The vote to open up debate on the bill - which now has 12 Democratic co-sponsors and one independent who caucuses with Democrats - was 67-32.

Angelides, who served as chairman of the Financial Crisis Inquiry Commission (from 2009 to 2011), which conducted the USA inquiry into the causes of the 2008 financial crisis, told Senate Banking Committee Chairman Mike Crapo, R-Idaho - the bill's sponsor - in a Monday letter that he was "deeply troubled" by the potential passage of S. 2155. Doing so, critics argue, would undermine the central goal of Dodd Frank - preventing major bank failures that lead to financial crisis.

"The bottom line is that S. 2155 does not require the deregulation of foreign banks, but they will no doubt be deregulated, which will once again put US taxpayers on the hook for bailouts of foreign banks rather than the taxpayers of those foreign countries", he said.

Several senior Democratic senators, including Warren and Sherrod Brown, have come out against it.

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

In a rare showing of bipartisanship, 13 Democrats - many of whom are facing tough midterm election contests this year - also support the bill. He says it's "a very modest recalibration that's going to help community banks and credit unions".

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Not every Democrat is supporting the bill.

"Let's say you and I are a regional bank, and we have a $100-$125 billion of assets", CFRA analyst Ken Leon said.

Sen. Mike Crapo, an Idaho Republican who introduced the measure, said Monday that it "is anything but a deregulation of Wall Street", The Washington Post reported. "But I believe a effect of it has been to accelerate consolidation of banks".

He added: "There's been a five-year delay on M&A in the banking industry". The CBO notes that this scenario is unlikely in any given year, but it says the bill makes it more probable.

The bill would also raise to $250 billion the amount of assets a bank has to have to be deemed systemically important to the financial system - a huge hike from the current $50 billion. That means more than two dozen banks would be shielded from some of the Federal Reserve's oversight.

The bill would also change how the "supplementary leverage ratio" is calculated, a key capital requirement for the biggest banks that was created to ensure those financial institutions could handle a financial disaster. Crippling regulations saddled smaller banks, forcing American consumers to market with fewer investment vehicles and greater costs.

The bill "would weaken the financial system safeguards and taxpayer and consumer protections put in place in the wake of the financial crisis, exposing American taxpayers, our financial system, and our economy to significant risk", Angelides said.

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