Some Dems ready to loosen tough bank regulations passed after financial crisis

From today’s LA Times:

Before the 2008 financial crisis, BAC Community Bank in Stockton made about 100 mortgage loans a year. Now, after new regulations mandated in the Dodd-Frank Wall Street Reform and Consumer Protection Act, the figure is down to about two dozen.

“We were never a big mortgage lender, but we did quite a bit more before Dodd-Frank,” said Bill Trezza, the bank’s chief executive. “It basically pushed us out of that to the point where we will do mortgages only for our customers if they request it.”

He and other small bankers hope that’s about to change. And a political shift is making that possible.

Nearly a decade after the financial crisis, some Democrats are ready to go along with a Republican push to significantly loosen the landmark law enacted to try to prevent the next one.

Senate legislation focused on easing new mortgage and other rules for small and mid-sized and regional banks has been co-sponsored by a dozen Democrats, several of them moderates up for re-election this year in states won by President Trump in the 2016 campaign.

The bipartisan support has the bill on track to be approved as soon as this week in what would be the first major overhaul of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

The House, which has approved more extensive financial deregulation, is likely to go along with the Senate’s more modest changes. Trump, who has called Dodd-Frank “a very negative force” in the economy and vowed during the campaign to dismantle it, would be expected to sign any bill that reduces its authority.

“The tone has shifted in D.C. from where regulation was necessary to protect the economy to the concern where regulation has gone too far and might be a drag on the economy,” said Ed Mills, a Washington policy analyst for financial services firm Raymond James. “Where that shift has occurred, it gave an opening to the smaller and medium-size banks to pursue these changes.”

But while there’s broad support for easing unintentional burdens in the law for small banks, many liberal Democrats are fighting the bill from Senate Banking Committee Chairman Mike Crapo (R-Idaho). They say it goes too far by also providing significant benefits for some larger financial institutions.

The legislation would exempt about 30 banks and other firms from the stricter oversight put in place by Dodd-Frank after the 2008 financial crisis. That 2010 law was an attempt to prevent a repeat of the bailouts and damage to the economy.

Read the complete article here.

House Republicans Are Trying to Pass the Most Dangerous Wall Street Deregulation Bill Ever

From Mother Jones, June 7, 2017 by Hannah Levintova:
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From the earliest days of his campaign, Donald Trump has opposed the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Obama-era financial reform law passed in response to the 2008 financial crisis.  Trump has characterized it as a “disaster” that has created obstacles for the financial sector and hurt growth. In April, he repeated his promise to gut the existing law.
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“We’re doing a major elimination of the horrendous Dodd-Frank regulations, keeping some, obviously, but getting rid of many,” Trump said in a meeting with top executives during a “Strategic and Policy CEO Discussion,” which included the leaders of major companies like Walmart and Pepsi. He added, “For the the bankers in the room, they’ll be very happy.”
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The Republican Congress shares Trump’s dislike of Dodd-Frank and this week, the House plans to vote on the Financial CHOICE Act, a Dodd-Frank overhaul bill that will, as promised, make banks and Wall Street “very happy” if it becomes law, while undoing numerous financial safeguards for regular Americans. (CHOICE is an acronym for “Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs.”)
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The bill, sponsored by Rep. Jeb Hensarling (R-Texas), takes aim at some of Dodd-Frank’s main achievements: It guts rules intended to protect mortgage borrowers and military veterans, and restrict predatory lenders. It also weakens the Consumer Financial Protection Bureau’s ability to oversee and enforce consumer protection laws against banks around the country—upending a mix of powers that have helped the CFPB recover nearly $12 billion for 29 million individuals since opening its doors in July 2011. The bill also weakens or outright cuts a number of bank regulations enacted through Dodd-Frank to keep risky investing behavior in check in order to avoid the economic devastation of another financial crisis or taxpayer-funded bailout.

Read the entire article here.

Five regulatory agencies approve Volcker Rule, curbing risky banking

Five federal regulatory agencies approved the so-called “Volcker Rule” today, restricting commercial banks from trading stocks and derivatives for their own gain and limits their ability to invest in hedge funds. The five agencies include the Federal Reserve, the Federal Deposit Insurance Corporation, Securities and Exchange Commission, the Commodity Futures Trading Commission and the Comptroller of the Currency:  all five agencies approved the Volcker rule, named after former Fed Chair Paul Volcker who championed restrictions on proprietary trading by banks, which puts into effect the centerpiece of the Dodd-Frank Act’s attempt to reign in financial corruption on Wall Street.

Congress passed and regulators approved the legislation despite the lobbying efforts of Wall Street banks, and the rule itself includes new wording aimed at curbing the risky practices responsible for the $6 billion trading loss, known as the so-called “London Whale,” at JPMorgan Chase last year. The Dodd-Frank Wall Street Reform and Consumer Protection Act was passed by Congress and signed into law by President Obama in July 2010, but the complex nature of financial regulation and the lobbying efforts of Wall Street slowed down the process of enacting the law.

The outgoing Fed Chair Ben S. Bernanke stated that “getting to this vote has taken longer than we would have liked, but five agencies have had to work together to grapple with a large number of difficult issues and respond to extensive public comments.”

Consumer advocacy groups praised the spirit of the rule as much needed reform of the greed and corruption that have become synonymous with Wall Street’s practices in the last decade, which led to the catastrophic consequences of the Great Recession including trillions of dollars and millions of jobs lost.

Dennis Kelleher, the head of Better Markets, said:  “The rule recognizes that compliance must be robust, that C.E.O.’s are responsible for ensuring a compliance program that works, that compensation must be limited, and that banned proprietary trading cannot legally be disguised, as market making, risk mitigating hedging or otherwise…Those requirements will not end all gambling activities on Wall Street, but should limit them and reduce the risk to Main Street.”

For a good summary of the Volcker Rule watch this video.