Financial overhaul loses steam
The negotiations on a sweeping regulatory overhaul have stalled more than one month after Senate Banking Committee Chairman Richard Shelby (R-Ala.) first proposed the legislation.
Business groups, and particularly community banks, greeted Shelby’s proposal with optimism, creating an encouraging start for was seen as the most significant regulatory overhaul since the 2010 Dodd-Frank law.
{mosads}But Shelby’s effort to attract support from centrist Democrats on the Banking panel — particularly Sens. Mark Warner (Va.), Joe Donnelly (Ind.), Jon Tester (Mont.) and Heidi Heitkamp (N.D.) — appear to be making little headway, sapping momentum from the effort.
Democrats on the Banking Committee have lined up against language in the bill that would broaden exemptions for banks from Dodd-Frank, fearing that language could undermine the new limits on Wall Street. Republican supporters say the bill would help ease regulatory burdens that are choking the economy.
Multiple sources working for and against the proposal say its future is now uncertain.
“This bill represents just one step in the process and it remains my strong preference that we find a way to come together on a bipartisan basis,” Shelby said.
One banking lobbyist offered a scathing take on the bill’s chances.
“It’s just approps bait,” the lobbyist said, meaning that the only way for the legislation to become law would be to attach pieces of it to appropriations bill expected to move this summer.
Shelby, who is term-limited as Banking chairman after this session of Congress ends, is adamant that he wants to continue working on the proposal, but he faces a ticking-legislative clock and the encroaching politics of a presidential election.
Legislation dealing with financial regulations often has a better chance of success it if has strong backing from the business community, which can sometimes help limit Democratic defections. But Shelby has been unable to secure Democratic support for his plan, and Wall Street appears to have largely shrugged its shoulders.
“The very largest banks don’t have very many benefits from this bill,” said Francis Creighton, executive vice president of government affairs at the Financial Services Roundtable. “This bill is really designed to help community banks, asset managers and mortgage providers.”
Democrats on the committee say they remain interested in legislation that would help community banks escape some of the mandates under Dodd-Frank.
Heitkamp said that there remains widespread, bipartisan consensus for regulatory relief for community banks “that everyone on the Committee should be able to support,” referring to a Democratic alternative to Shelby’s bill.
“I’m not into messaging bills — I want to actually get things done,” she said. “If both sides come together, this bill could pass tomorrow and we could have real reform.”
Sen. Sherrod Brown (D-Ohio), the ranking member of the Banking panel, has introduced a regulatory relief bill endorsed by all the Democratic members of the committee. But that bill includes an expansion of the Consumer Financial Protection Bureau, an agency fiercely opposed by Republicans.
A Democratic aide said there remains “bipartisan consensus to help community banks and credit unions.”
Another banking lobbyist was more optimistic about Shelby’s effort — despite no Democrats supporting it during last month’s committee vote, Shelby could make a play for other centrist Democrats on the floor in order to reach 60 votes, the lobbyist said.
“This is not a Big Bank bill,” the lobbyist said. “There is still some negotiating being done behind the scenes to ensure this meets the 60-vote threshold.”
But Douglas Holtz-Eakin, a Republican economist and president of the American Action Forum, said that many Democrats fear “retribution from the left” if they get “even a little to the right” of Sen. Elizabeth Warren (D-Mass.).
Warren, one of the biggest critics of Wall Street on Capitol Hill, voted against Shelby’s bill during the markup.
“There is no place for Democrats to go,” Holtz-Eakin said. “That makes it hard for the White House and Senate Democrats to contribute.”
This story was updated on June 15 at 7:41 p.m.Copyright 2024 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed..