Congress acted on a promise made by the president, but probably not to the degree many supporters would like.
On Tuesday, “the House passed bipartisan legislation that would ease bank rules introduced in the wake of the 2007-2009 financial crisis, giving President Donald Trump a major legislative victory,” Reuters reports.
The total was 258-159, with 33 Democrats voting in favor of the bill.
Specifically, the vote relaxes some of the 2010 Dodd-Frank rules that critics say have hurt smaller banks and community lenders. However, it fell short of the “big number” Trump promised to do on the law in the immediate aftermath of the inauguration.
Nonetheless, the vote is seen as a major legislative victory for deregulation advocates, and a compromise to help small banks more effectively operate while keeping restrictions on their larger counterparts like Citi, Wells Fargo and Goldman Sachs.
Called the “Economic Growth, Regulatory Relief and Consumer Protection Act,” it “right-sizes the regulatory system for smaller financial institutions, allowing community banks and credit unions to succeed and invest further in their local areas,” according to Republican Senator Mike Crapo of Idaho, chairman of the Senate Banking Committee.
“Rather than spending time on compliance, these institutions can redirect resources toward what they do best—approving mortgages, providing credit, and lending to small businesses and families in their communities,” he added.
It also raises the threshold from $50 billion to $250 billion for banks to be considered too big to fail.
Dodd-Frank was signed into law by then-President Obama, “To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail,’ to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.