Senate Dems Wary of Changes to Bank Relief Bill as Debate Begins

By Jeff Bater and Lydia Beyoud

House Republicans are eyeing potential additions to a bipartisan banking regulation overhaul bill ( S. 2155) on the Senate floor this week even as key Democratic backers warn too much change could sink it.

“We don’t want to kill the bill in the House, I think we can make it better,” Rep. Blaine Luetkemeyer (R-Mo.) said March 6 at the Institute for International Bankers annual conference in Washington. Luetkemeyer is chairman of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, and co-owns a community bank with his brother.

Some of those changes to the measure that would relax regulations for community and regional banks could include bipartisan bills the House has already passed, Luetkemeyer said. “There’s about 25 or 30 that I think came out with huge bipartisan numbers,” he told Bloomberg Law after his remarks.

The House has passed several banking-related bills in recent months, many with bipartisan support. These include measures that would ease operational risk capital requirements (H.R. 4296) and allow banks to submit “living will” resolution plans less frequently to regulators (H.R. 4292).In the latest action March 6, the House passed bills by voice vote that would reduce regulatory reporting requirements for banks less than $5 billion in assets (H.R. 4725) and would ease mortgage rules on community lenders (H.R. 2226). Another bill (H.R. 4607), which passed 264-143, would shorten how often banking regulators are required to review potentially outdated rules — from the current 10-year period to every seven years.

Risky Changes

Too many changes risks upsetting the bill’s bipartisan supporters. The Senate bill’s 25 cosponsors include 12 Democrats and one Independent.

Sen. Tim Kaine (D-Va.), a cosponsor of the Senate bill, said a lot changes by the House Republicans “could be a real problem.”

“I think the bill may pass here — but fairly, finely balanced, and just getting over that 60-vote threshold,” Kaine told Bloomberg Law. “I think if the House were to adjust it to the right, I think it would probably not end up getting enough support.”

Similarly, Sen. Jon Tester (D-Mont.), told Bloomberg Law that significant changes in the House would “probably kill the bill.”

Luetkemeyer said including “small bills” to the broader package of changes to the 2010 Dodd-Frank Act “can be helpful,” Luetkemeyer said.

While adjustments might be made in the legislative process, Cowen and Company analyst Jaret Seiberg said in a note to clients March 6 he thinks the package as proposed “is unlikely to change in a material way.”

“We would not expect material amendments to be added to the measure,” he wrote, adding, “At the end of the day, the final package will be whatever can get out of the Senate. We don’t see the House being able to make changes.”

Sen. Heidi Heitkamp (D-N.D.), an S. 2155 sponsor, told Bloomberg Law she is confident the bill’s bipartisan support will hold as it proceeds.

“Right now, the challenge would be making sure the coalition of folks who have put this bank bill together hold,” Heitkamp said. “The next obstacle is making sure the House doesn’t mess this up.”

To contact the reporter on this story: Jeff Bater in Washington at jbater@bloomberglaw.com

To contact the editor responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com

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