Trump Signs Off On Decrease in Bank Regulations

On Thursday, President Trump signed a bill easing regulations for most banks (just not the biggest names on the market). This is the most significant rollback on law regulations for these institutions since the global financial crisis.

Although both chambers of Congress support this measure, the bill has caused some division: supporters say that it will take away unnecessary requirements for small and medium-sized banks to boost the economy, while opponents have highlighted that the bill could increase the chances for discrimination-based mortgage lending.

Trump teased his decision to move forward with the reforms by tweeting “After many years, RIGHT TO TRY and big changes to DODD FRANK.” Before signing the bill, Trump stated that “a lot of great Democrats knew that it had to be done and they joined us in the effort,” and that there should be more efforts from Congress to get to bipartisan decisions.

The new regulations include an increase to the threshold for which banks are deemed too important to the financial system to fail; the threshold moves from 50$ billion to 250$ billion. Smaller institutions will be less pressured to undergo procedures to avoid financial disaster, including stress tests.

Still, some have argued that this change could still support larger institutions; supervision could now be more focused on banks with assets between 100$ billion and 250$ billion.

Republicans had previously showed discomfort with the Dodd-Frank regulations, stating that they discouraged lending and held back economic growth. Two days prior to this new bill’s signing, Paul Ryan referred to the bill as a benefit for community banks, stating that “This is a bill for the small banks that are the financial anchors of our communities… It addresses some of Dodd-Frank’s biggest burdens to ease the regulatory costs on these small banks—costs which are ultimately transferred on to consumers.”

But a few left-leaning senators—such as Bernie Sanders—have opposed the bill; they believe that it will leave the liability on taxpayers if banks were to fail. House Minority Leader Nancy Pelosi also highlighted the argument that the new bill would open the door for more discrimination-based lending by banks. Pelosi maintains that “We should be taking steps to move forward, not making the situation worse.”

Rolling back on regulations has been a Republican priority since the beginning of the Trump administration, so their support for the new bill does not come as a surprise. The Democrats’ support, on the other hand, is a stark departure from their previous approach to bank-related regulations; they have constantly supported the Dodd-Frank reforms.

Regardless, the bill received support from seventeen Democratic senators and thirty-three House Democrats, counting for a 258-159 margin of House votes and moving it forward through Congress. Meanwhile, some Republicans have expressed their belief that the regulations have not rolled-back enough, advocating for a near complete removal of the Dodd-Frank regulations.

Senator Heidi Heitkamp expressed her excitement for this new reform. She was the only Democrat who helped write the bill, and was later invited to its signing. She remarked: “This is a great day for Main Street in rural America, and a big testament to what’s possible when members of Congress put partisanship aside and work together to help our communities grow and thrive.”

Featured Image via: Flickr/Gage Skidmore