A massive bill to repeal the Dodd-Frank financial law and allow better-capitalized banks to opt out of much of government regulation is heading to the House floor for a final vote on passage that is expected Thursday.
Over Democratic objections, the House Rules Committee on Tuesday allowed only five amendments that appeared to be uncontroversial plus a manager’s amendment to be considered, and it declined to allow a hearing for a proposal to reinstate the Depression-era Glass-Steagall Act.
The committee recommended a structured rule for the bill and made six amendments in order. House Financial Services Chairman Jeb Hensarling, R-Texas, who shepherded his bill through committee, said he expects a floor vote Thursday.
Democrats objected to the rule for the bill because it did not allow the Glass-Steagall amendment by Reps. Marcy Kaptur, D-Ohio, and Walter B. Jones, R-N.C. The amendment would separate commercial banks and investment banks, a requirement adopted during the Great Depression and eliminated in 1999. The committee rejected the effort in a party-line vote.
The bill would reverse one of the biggest pieces of legislation enacted during President Barack Obama’s two terms. Congress passed Dodd-Frank in 2010 in the aftermath of a deep financial crisis and recession. The law was designed to prevent practices that led to the crisis.
The House Republican Conference says it is setting up accommodations Thursday in the House Longworth Building for media to cover the floor debate.
The bill, approved by the House Financial Services Committee last month on a party-line 34-26 vote, had been slated to come to the floor before the House recess last week, but was weighed down by another divisive provision, repeal of the Durbin amendment. That Dodd-Frank feature, which cut in half what banks could charge retailers for customers’ use of debit cards, led to about $8 billion a year in savings for retailers and a similar loss for banks.
The amendment, offered by Sen. Richard J. Durbin, D-Ill., became part of the law (PL 111-203). Lawmakers approved repeal of the amendment on the bill that moved through committee, but GOP whip counts showed it could threaten passage. Hensarling has said he will remove that provision from the bill.
Hensarling and many Republicans blame the law for the slow growth of the U.S. economy since the recession. A key provision of the bill is to release banks that maintain a simple ratio of $1 of equity for every $10 of assets from the enhanced, prudential regulation of Dodd-Frank. Hensarling told Rules Committee members that he didn’t expect Wall Street banks to qualify for the regulatory exemption, but that he did expect smaller banks to qualify.
A “staggering statistic” that exemplifies Dodd-Frank’s overreach is the collapse in new banks being approved, which before that legislation averaged more than 100 new banks a year, Rules Chairman Pete Sessions of Texas said. Only two new banks opened during the five and a half years after Dodd-Frank became law in mid-2010, according to Federal Deposit Insurance Corporation data.
But Rep. Jim McGovern, D-Mass., another Rules member, said Hensarling’s bill was an example of “recklessness and stupidity,” and he used Democrats’ nickname for the bill, “the Wrong Choice Act.” The title of Hensarling’s bill is the Financial CHOICE Act.
McGovern said he feared if the measure became law that there would be a return to the excesses of the financial services industry that many blame as a cause of the Great Recession.
“My Republican friends are in charge and they can do whatever the heck they want to, but I think they’ll regret this day,” McGovern said.
In a Statement of Administration Policy issued Tuesday, the White House endorsed the bill and said it supported provisions that would put the Consumer Financial Protection Bureau — an agency established by Dodd-Frank and long a target of Republican criticism — under the congressional appropriations process and provide regulatory relief to smaller, local banks. But the statement seemed to acknowledge the opposition to the bill by Democratic senators who are expected to keep the legislation from clearing that chamber.
“Upon passage, the Administration looks forward to working with the Senate on arriving at a final piece of legislation,” the administration statement said.
That final line in the White House release “struck me as kind of strange,” McGovern said. “It doesn’t sound like a ringing endorsement.”
Senate Banking Chairman Michael D. Crapo, R-Idaho, is expected to take a more bipartisan approach to regulatory changes. Crapo, along with ranking Democrat Sherrod Brown of Ohio, have been accepting proposals from industry and consumers on how changes to financial regulation could help spur the economy, and Crapo has said he expects legislation to come out of that effort.