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Legislative Updates

Senate passes financial deregulation bill

Today, the Senate passed a wide-ranging bank deregulation bill in a 67-31 vote with 16 Democrats and Sen. Angus King (I-ME) joining all Senate Republicans in support. S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, would scale back key parts of the 2010 Dodd-Frank law, which was passed in response to the 2008 financial crisis.

While not going quite as far as a House-passed bill that roll back banking rules even further, the bill still represents one of the most significant rewrites of financial industry rules in the last decade. Perhaps its most significant provision would raise the threshold at which banks are subject to certain federal oversights. Currently, banks with assets of $50 billion or more are considered systematically important financial institutions and are more heavily regulated. This bill would raise that threshold from $50 billion to $250 billion.

Prior to the 2008 financial crisis, the investment bank Lehman Brothers had assets of around $275 billion and Countrywide Financial, one of the largest subprime mortgage lenders, had assets of around $210 billion. Both went bankrupt with Lehman fully collapsing and Countrywide being bought out by Bank of America.

While a number of moderate Democrats supported the bill, progressives are concerned such a high threshold for regulatory scrutiny will subject the country to the same practices that led to the initial crisis.

The bill also will exempt community banks and credit unions from some requirements for loans, mortgages, and trading, among other measures. Critics of the bill highlight these exemptions as well, citing potential harm to consumers.

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