Senate Banking Committee Chairman Mike Crapo (R-Ida.), second from left, arrives with Treasury Secretary Steven Mnuchin, right, at the Senate Banking Committee on Capitol Hill in Washington. (Susan Walsh/AP)
A plan to scale back post-financial crisis banking rules cleared a key Senate hurdle Tuesday on a large bipartisan vote, with more than a third of the Senate Democratic caucus joining united Republicans to move the measure toward passage.
The vote was 67 to 32, well over the 60 votes needed in the closely divided Senate, setting up debate and final passage in coming days.
Days of contentious wrangling on the Senate floor lie ahead, with Sen. Elizabeth Warren (D-Mass.) pledging to deliver a series of speeches in opposition. But the level of bipartisan support Tuesday, with 17 members of the Senate Democratic caucus voting “yes,” suggested the measure will ultimately get the chamber’s approval.
The House would need to approve the legislation, as well, before it could become law.
If passed, the measure would mark the most significant revision of banking rules since Congress passed a sweeping financial regulatory law in response to the 2008 economic crisis. It is also a rare instance of bipartisan legislating in the Senate, something that’s occurred infrequently under the Trump presidency.
Supporters argue that the legislation would bring much-needed relief to midsize and regional banks that were treated like their much larger counterparts under the 2010 legislation known as Dodd-Frank.
“This bill is mostly focused on community banks and credit unions. My state’s lost 30 percent” of such institutions, Sen. Mark R. Warner (D-Va.) said ahead of the vote. “That does not help grow the economy, particularly in smaller communities.”
Opponents say it would weaken the oversight needed to stave off the type of dangerous lending and investing that brought the U.S. economy to its knees a decade ago.
This bill is “extraordinarily dangerous” for the economy, Warren told reporters Tuesday. “It’s not as if the banks are suffering. They think they can juice their profits if they can get Congress to turn down the regulations.”
President Trump supports pulling back some Wall Street regulations, and the administration has been broadly supportive of the legislation.
The Senate bill would exempt about two dozen financial companies with assets between $50 billion and $250 billion from the highest levels of scrutiny by the Federal Reserve.
The proposed changes for the midsize banks include less stringent regulations on submitting plans for winding down if they fail; looser liquidity rules, which mandate that banks have easy access to safe capital in case their loans go south; and fewer “stress tests,” which gauge how prepared a bank is for a financial crisis.
The measure has exposed a Democratic Party rift over financial regulations that pits liberals such as Warren and top Banking Committee Democrat Sherrod Brown (Ohio) against moderate-leaning Democrats including Sens. Jon Tester (Mont.), Heidi Heitkamp (N.D.) and Joe Donnelly (Ind.).
Tester, Heitkamp and Donnelly are all up for reelection in November in states Trump won by a large margin. Along with Warner, who was one of the lead authors of the original Dodd-Frank bill, Tester, Heitkamp and Donnelly helped negotiate the legislation with Senate Banking Committee Chairman Mike Crapo (R-Idaho). But they said they were not motivated by reelection concerns or the desire to establish a bipartisan voting record.
“I would just tell you that this election has nothing to do with this,” Tester said. “We were working on this five years ago. This has everything to do with access to capital and making sure rural America remains strong moving forward.”
The House has already passed legislation that would repeal larger chunks of the Dodd-Frank rules, so proponents’ biggest challenge may be to reconcile the House and Senate versions.
Several of the key Democrats supporting the bill insisted Tuesday that the House must pass their version unchanged or risk ending up with no bill at all. For the House to change the bill “would be folly,” Heitkamp said.
But the House typically resists swallowing legislation passed by the Senate without putting its imprint on it, so it remains to be seen how those negotiations will play out.
Jeffrey Stein contributed to this report.