Latest version of Senate Dodd-Frank relief bill aims to address key criticism of Democrats

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Midsize banks urge passage of Senate reg relief bill


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WASHINGTON — The latest version of a bill to give regulatory relief to community banks and credit unions includes language designed to address a key criticism of the bill by ensuring that large foreign bank holding companies do not also see their supervision eased.

Under a new version of the legislation released late Wednesday evening, the bill clarifies that large foreign banks such as Barclays, Credit Suisse and Deutsche Bank do not escape regulation as systemically important financial companies just because their U.S. units have less than $250 billion of assets.

“This confirms that the bill doesn’t do anything with foreign banks,” said Senate Banking Committee Chairman Mike Crapo. “This is an assurance that the bill doesn’t do what people are saying that it did.”

Bloomberg News

The change was made in response to criticism by progressive Democrats, such as Sen. Sherrod Brown of Ohio, that the bill as written would allow large foreign banks to benefit from a provision that raises the SIFI threshold to $250 billion of assets from $50 billion. Banks above that level face higher capital and liquidity requirements and tougher supervision by the Federal Reserve Board.

“Many of us in this body are concerned about this deregulation bill … especially when it comes to foreign banks, those banks that are huge, but their assets in this country are under $250 billion,” Brown said last week.

Senate Banking Committee Chairman Mike Crapo and a handful of moderate Democrats made the change as part of a so-called manager’s amendment, a new version of the bill that makes several changes to the earlier version passed 16-7 by the banking panel in December.

In an interview, Crapo said the bill was never intended to help foreign banks’ intermediate bank holding companies in the U.S. The new language clarifies that is the case.

“This confirms that the bill doesn’t do anything with foreign banks,” Crapo said. “This is an assurance that the bill doesn’t do what people are saying that it did.”

Other changes to the bill are intended to help with capital formation, measures that had separately cleared the banking panel with the support of Brown, who opposes the underlying regulatory relief bill.

“That is a big deal,” Crapo said.

The changes are unlikely to cause Brown to change his mind about the overall bill. Progressive Democrats have launched an all-out assault on the legislation and the dozen Democrats who support it. They’ve characterized it as a bill to help “big banks,” though most of the provisions are intended to help small community banks and credit unions. The legislation does little to help the largest institutions, which would continue to be regulated as systemically important financial institutions.

Crapo added that there are a few bills that the House has passed with bipartisan support that were also added to the Senate’s manager’s amendment.

The Senate made an effort to include some of those provisions so the House, which passed a much farther reaching bill last June to overhaul the Dodd-Frank Act, can claim that the bill reflects their input.

“We have passed a number of bipartisan measures in the House and we expect those to be reflected in the final bill that gets to the president’s desk,” House Financial Services Committee Chairman Jeb Hensarling, R-Texas, told Bloomberg TV earlier Wednesday.

However, Sen. John Tester, D-Mont., told reporters on Tuesday that if the House goes too far to change the legislation, the carefully negotiated deal will fall apart in the Senate.

Crapo said it’s a “possibility” that the Senate legislation could be voted on as soon as this week.

Ian McKendry

Ian McKendry is the Congress reporter for American Banker.



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