Senate Prepares to Take Up Bank Relief Bill Next Week

By Jeff Bater

A banking regulatory relief package heading to the Senate floor next week could be amended to include provisions that attracted strong bipartisan support in the House, a key Democratic backer said.

“If they’re non-controversial, we’ll certainly consider them,” Sen. Jon Tester (D-Mont.), who co-sponsored the Senate bill ( S. 2155) that eases Dodd-Frank Act requirements on small and mid-size banks, told Bloomberg Law.

“If they’re controversial, they’re probably not going to go in,” he said on Capitol Hill. “Controversial would be something that didn’t pass the House overwhelmingly.”

Senate Banking Committee Chairman Mike Crapo (R-Idaho) said he expects a floor vote next week on the measure. Majority Leader Mitch McConnell (R-Ky.) has laid the procedural groundwork to take up the bill.

The bipartisan Crapo bill would have to be reconciled with a broad rollback ( H.R. 10) of Dodd-Frank that passed the House in June 2017 with only Republican support. The House more recently has passed a flurry of smaller banking-related bills — many with bipartisan support — with an eye toward eventual negotiations with the Senate on a bank relief package.

One possible amendment to S. 2155 is a House bill that would allow banks to submit living wills less frequently. The bill ( H.R. 4292), sponsored by Reps. Lee Zeldin (R-N.Y.) and Carolyn Maloney (D-N.Y.), prevents federal regulators from requiring the Dodd-Frank resolution plans more frequently than every two years. H.R. 4292 passed the House 414-0 in January.

Other bills recently passed by the House would ease operational risk capital requirements for banks ( H.R. 4296) and require the Securities and Exchange Commission to issue a subpoena to obtain source code from high-frequency traders ( H.R. 3948). Another bill ( H.R. 3312) would remove the $50 billion asset threshold for designating banks as systemically risky and replace it with several other criteria.

A possible avenue for making multiple changes to the Crapo bill is a manager’s amendment, which would replace the existing text of the legislation. Crapo told reporters March 1 he has hopes there will be significant additions to S. 2155 “but I’m not making any guarantees at this point.”

Tester said he spoke with Crapo about the bill’s timing on the Senate floor, but did not discuss amendments.

Balancing Act

Crapo crafted S. 2155 to attract bipartisan support and avoid divisive issues such as breaks for large Wall Street banks or weakening the Consumer Financial Protection Bureau. Among the Senate bill’s 25 co-sponsors, 12 are Democrats and one is an Independent.

The bill would raise the asset threshold for labeling banks as systemically risky from $50 billion to $250 billion — allowing dozens of regional banks to escape heightened supervision and capital requirements, among other things. S. 2155 also provides a number of regulatory breaks for community banks.

Making significant changes to S. 2155 will be “a balancing act” for Crapo, according to Ed Mills, a Washington policy analyst at Raymond James.

“He will need to add enough to win over House Republicans without threatening the current support he has from Senate Democratic co-sponsors — votes he needs to clear the 60-vote threshold for Senate passage,” Mills said in a March 1 research note, referring to the chamber’s filibuster.

If the Senate passes a bill that includes a number of the House priorities, there could be pressure on the House to pass that version and send it to the White House for President Donald Trump’s signature, Mills said.

“If this is the case, the bill could be signed into law in a matter of weeks,” he said. “If the House insists on additional changes, it could delay the bill for a few months. Either way, we see very high odds of this bill being signed into law before the August congressional recess.”

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