House Has Few Avenues to Alter Senate Bill Easing Bank Rules

By Evan Weinberger and Jeff Bater

A Senate-passed bill that would roll back some Dodd-Frank Act regulations is likely to reach President Donald Trump’s desk without many changes despite House Republicans digging in on demands for additions.

The bill, S. 2155, passed March 14 with the support of 16 moderate Senate Democrats and one independent. The bill calls for changes that would ease mandates on community banks and significantly lower the number of regional banks subjected to tighter capital and other rules.

Those votes came with a price, with Sen. Elizabeth Warren (D-Mass.), and other more liberal members of the chamber and outside activist groups pounding supporters of the legislation over their vote. Because of that, there is little appetite in the upper chamber of Congress to move forward with a second vote on an expanded bill.

“They got 67 votes on the Senate side. They needed 60. Democrats can say we’re not going to vote for this again,” Aaron Cutler, a partner with Hogan Lovells LLP, told Bloomberg Law.

“[The Senate has] a lot of other stuff to do. You have to imagine that Senator [Mitch] McConnell [(R-Ky.)] is not eager to spend another week on the floor” on a banking bill, said Cutler, who served as a top aide to former House Majority Leader Eric Cantor (R-Va.).

One Train Moving

That has not stopped House Financial Services Committee Chairman Jeb Hensarling (R-Texas) from pushing for the inclusion of several financial services bills, many of which have passed through the House in recent years with bipartisan support and, in some cases, by voice vote.

“I think the House realizes that this is the one train that’s moving this year, and they’d like as many of these deregulatory bills to ride on that train as possible,” Joe Valenti, director of consumer finance at the Center for American Progress, told Bloomberg Law in a phone interview.

“Whether that tips over the train remains to be seen,” added Valenti, who opposes the Senate bill.

Democratic supporters of the Senate bill noted they have already included several House-passed bills in S. 2155.

Among the House bills that were incorporated in the Senate’s banking legislation are measures changing the treatment of municipal securities in banks’ liquidity calculations ( H.R. 1624) and one that would allow mortgages that community banks issue and hold in their portfolios to be considered qualified mortgages by the Consumer Financial Protection Bureau ( H.R. 2226).

Among the bills that Hensarling would like to see added, and that saw broad bipartisan support in the House, are measures that would ease securities offerings for small issuers and bring changes to the process under which banks draft resolution plans should they fail.

One such bill, H.R. 4292, would clarify that banks would only have to complete living wills every two years. The Federal Reserve and the Federal Deposit Insurance Corp. collect and review bank resolution plans each year. Policy makers at the Fed support extending the living will process to a two-year cycle.

Enhanced Supervision Regime

Other measures that Hensarling and his colleagues may attempt to add on to S. 2155 are more controversial.

H.R. 3312 would change how larger banks are determined to be subjected to enhanced capital rules, stress testing, and other stricter supervisory measures than what is proposed in S. 2155.

The House bill, introduced by Rep. Blaine Luetkemeyer (R-Mo.), would eliminate Dodd-Frank’s $50 billion threshold for putting banks under tougher oversight and replace it with a test of activities and other, more subjective measures. The Senate bill simply lifts the asset threshold for systemically risky banks from $50 billion to $250 billion, but gives the Fed the chance to review the status of exempted banks.

Luetkemeyer leads a House Financial Services Committee subcommittee.

“I know there’s a gazillion thresholds within law,” Hensarling told Bloomberg Law on March 15. “What the Senate did at least improved current law, and I give them credit for that. But I still think there’s a superior method here.”

Measures like Luetkemeyer’s may be too much for Senate Democrats, Cutler said.

“I think that would be difficult to get through the Senate. That might be one step too far for some of the moderate Dems who voted for the Crapo bill,” he said, referring to the Republican senator from Idaho.

Hensarling’s Options

How committed Hensarling and other House Republicans, including Speaker Paul Ryan (R-Wis.), are to making changes to the Senate bill — and how they do so — remains to be seen.

“The only thing that seems certain is that a bill will be enacted before the election,” said Daniel F.C. Crowley, a partner with K&L Gates LLP and a former aide to former House Speaker Newt Gingrich.

That could mean any additions to the Senate bill come through a conference committee. Or House Republicans and Hensarling could opt to pass a clean version of the bill and add some of the less controversial financial services measures to an omnibus spending bill that is being negotiated, Cutler said.

“He has another way to achieve his goals besides going to a conference,” Cutler said.

To contact the reporters on this story: Evan Weinberger in New York at; Jeff Bater in Washington at

To contact the editor responsible for this story: Michael Ferullo at

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