Elizabeth Warren attacks 'dangerous, wrong' bill to relax rules on USA banks

Sen. Jon Tester D-Mont. flanked by Sen. John Boozman R-Ark. left and Sen. James Lankford R-Okla. arrive with other lawmakers for a procedural vote as the Senate moves to pass legislation that would roll back some of the safeguards Congress put into

The Senate is preparing to scale back the sweeping banking regulations passed after the 2008 financial crisis, with more than a dozen Democrats ready to give Republicans the votes they need to weaken one of President Barack Obama's largest legislative achievements.

Nevertheless, the bill isn't garnering rave reviews from all sides of the political spectrum.

"The question I would pose is: 'Why are we doing this?' With bank profits at or near all-time highs, lending rebounding since the crisis, I'm not sure what problem the bill is trying to solve", said Gregg Gelzinis, research assistant for economic policy at the Center for American Progress, a left-leaning think tank.

The House Financial Services Committee chairman says the House banking bill Congress is working on this week is a "recalibration" of the banking regulations known as Dodd-Frank that will help community banks and credit unions increase capitalization.

Crapo's bill would ease the capital and operational burden on smaller lenders, but also includes a number of provisions beneficial to all but the largest USA banks.

Smaller banks like BB&T (BBT), SunTrust (STI), People's United (PBCT), Signature Bank (SBNY) and East-West Bank (EWBC) are among those could benefit, Gardner said. Now, just about 10 years after the financial crisis that destroyed millions of jobs and devastated the country, Republicans want to weaken Dodd-Frank and unleash some of the banks' worst tendencies. The new bill would boost that threshold to $250 billion.

The biggest change in the bill would raise the trigger at which banks are considered "too big to fail" from $50 billion in assets to $250 billion in assets. Under Dodd-Frank, that asset threshold is $50 billion, which captures more banks.

"The bottom line is that S. 2155 does not require the deregulation of foreign banks, but they will no doubt be deregulated, which will once again put US taxpayers on the hook for bailouts of foreign banks rather than the taxpayers of those foreign countries", he said.

Sen. Elizabeth Warren D-Mass. a key member of the Banking Committee expresses her opposition to a move in the Senate to pass legislation that would roll back some of the safeguards Congress put into place after a financial crisis rocked the nation’s

Meanwhile, the Congressional Budget Office released on Monday a score of the bill, stating that enacting it would increase federal deficits by $671 million over the 2018-2027 period; that increase in the deficit represents an increase in direct spending of $233 million and a decrease in revenues of $439 million.

One of the major changes proposed in the bill is a provision that would shrink the number of big banks that, under Dodd-Frank, are subject to additional scrutiny created to assess their ability to withstand financial shocks-in essence, extra checks to determine how likely the banks are to fail or to require a government rescue with public dollars.

So given the risks, why are some Democrats signing on?

Moderate Democrats who support the legislation rejected Warren's claims, saying on Tuesday it offered critical relief for small and mid-sized lenders and that they expected it to quickly pass the Senate. Elizabeth Warren, D-Mass.

One reason the legislation may not have garnered as much attention as net neutrality or the ACA: Consumers may not immediately see how the regulations affect them.

A Senate effort to relax certain banking regulations has cleared an early procedural hurdle with enough support from Democrats to show the bill has a good chance of passage.

"A lot of the rules are really complicated and arcane and complex", Gelzinis said.

"I'm going to fight back", Warren said. "But [such rules] are extremely important".

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