Senate Banking Panel Likely to Target Financial Regulations

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By Rob Tricchinelli

Nov. 9 — The Senate Banking Committee is expected to have a more robust deregulatory agenda in 2017, after Republicans captured the White House and held their slim Senate majority.

“This election could upend Dodd-Frank and the rest of the post-crisis financial regulatory structure,” Justin Schardin of the Bipartisan Policy Center told Bloomberg BNA.

Sen. Mike Crapo (R-Idaho), who heads the securities subcommittee, is in line to chair the full committee as Republicans target the Dodd-Frank Act and other financial regulations.

‘Disappointing.’

Policy analysts predict a more active committee compared to the tenure of departing chairman, Sen. Richard Shelby (R-Ala.).

“One thing’s for sure, the banking committee will be much more active under new leadership,” Emily Liner, a financial policy adviser at centrist think tank Third Way, told Bloomberg BNA.

The committee hasn’t held a markup on banking legislation since May 2015. It approved some of President Barack Obama’s nominees but others remained in limbo.

“I think that the Senate Banking Committee has been disappointing in the level of legislating that’s been done in this Congress,” Isaac Boltansky, a policy analyst at Compass Point Research & Trading, told Bloomberg BNA.

That will change with the same party in the White House also holding the Senate majority.

Chairman Crapo’s Priorities

Republican caucus rules limit the terms of committee chairmen, and Shelby is running up against the cap. Crapo, who was first elected to the Senate in 1998 after three terms in the House, is next in line for the chairmanship.

Crapo’s substantive policy positions, analysts say, are similar to Shelby’s, but he is less likely to follow Shelby’s lead and run a quiet committee, especially with a Republican president.

President-elect Donald Trump has said he wants to “get rid of” the Dodd-Frank Act but hasn’t offered specific policy proposals on changing the law.

In Congress, both parties agree in principle on providing relief to community banks, but Republican lawmakers have a more ambitious deregulatory agenda.

Sweeping bills from the previous session provide some sense of their likely approach. On the Senate side, a Shelby bill provided community bank relief and raised the asset threshold under which banks qualify as “systemically important,” but it also included changes to the Federal Reserve that were unpalatable to Democrats.

In the House, Rep. Jeb Hensarling (R-Texas) offered a wide-ranging bill of his own that would alter the Consumer Financial Protection Bureau, repeal the Volcker Rule, change capital requirements and reduce regulations on startups.

Crapo’s subcommittee held hearings this year on fixed-income markets and small-business capital formation. Those issues could attract his attention again in 2017.

Nominees

The committee is also likely to be more friendly to Trump’s executive branch nominees.

Trump has threatened a moratorium on new regulations, a priority that his executive branch nominees could carry out once confirmed.

“The moratorium wouldn’t dismantle Dodd-Frank, but the people he nominates could do much of that job,” Schardin said.

Republicans still must surmount a 60-vote threshold to avoid filibustering, but the chance remains that party leadership could further dismantle filibuster rules.

“Democrats on the Senate Banking Committee will need to have a united front going into nomination season,” Liner said Nov. 9. “And, given last night’s result, Democrats are going to have to work twice as hard to defend Dodd-Frank.”

Roster Changes

There will be some seats to fill on the Republican side with departing moderates. Sen. David Vitter (La.) is leaving the Senate, and Sen. Mark Kirk (Ill.) lost his reelection bid to Rep. Tammy Duckworth (D).

“They’re guys who work with Democrats whenever they have the opportunity,” Liner said.

Sen. Pat Toomey (R-Pa.) held on to his seat in a close race, and other panel members, such as Sen. Tim Scott (R-S.C.), won comfortably. Sen. Charles Schumer (D-N.Y.) could leave the panel if he becomes leader of the Senate Democrats, as expected.

To contact the reporter on this story: Rob Tricchinelli in Washington at rtricchinelli@bna.com

To contact the editor responsible for this story: Phyllis Diamond at PDiamond@bna.com

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