Originally Published: May 23, 2018 6 a.m.
WASHINGTON (AP) – Congress moved Tuesday to dismantle a chunk of the rules framework for banks, installed to prevent a recurrence of the 2008 financial crisis that brought millions of lost jobs and foreclosed homes.
The House voted 258-159 to approve legislation rolling back the Dodd-Frank law, notching a legislative win for President Donald Trump, who made gutting the landmark law a campaign promise.
The Republican-led legislation, pushed by Wall Street banks as well as regional banks and smaller institutions, garnered some votes from House Democrats. Similarly, the bill splintered Democrats into two camps when the Senate voted 67-31 to approve it in March.
The bill raises the threshold at which banks are deemed so big and plugged into the financial grid that if one were to fail it would cause major havoc. Those banks are subject to stricter capital and planning requirements. Backers of the legislation are intent on loosening the restraints on them, asserting that would boost lending and the economy.
The legislation is aimed at especially helping small and medium-sized banks, including community banks and credit unions. But critics argue that the likelihood of future taxpayer bailouts will be greater once it becomes law. They point to increases in banks' lending and profits since Dodd-Frank's enactment in 2010 as debunking the assertion that excessive regulation of the banking industry is stifling growth.
U.S. banks' net income climbed to $56 billion in the January-March quarter, a 27.5 percent increase from a year earlier, as profits were revved up by the corporate tax cuts enacted late last year, the Federal Deposit Insurance Corp. reported Tuesday.
"This is not a bill that benefits consumers. It is a big-bank bonanza," Rep. Al Green, D-Texas, said in debate on the House floor before the vote.
The bill makes a fivefold increase, to $250 billion, in the level of assets at which banks are deemed to pose a potential threat if they fail. The change would ease regulations and oversight on more than two dozen financial institutions, including BB&T Corp., SunTrust Banks, Fifth Third Bancorp and American Express.
Eventually, the exempted banks will no longer have to undergo an annual stress test conducted by the Federal Reserve. The test assesses whether a bank has a big enough capital buffer to survive an economic shock and keep on lending.