"The sponsors of the bill are well aware that bank bailouts are unpopular and so they try to perpetuate this notion that Dodd-Frank perpetuates bailouts - it's simply nonsense", Carter Dougherty, communications director for Americans for Financial Reform, an organization dedicated to safe and consumer friendly banking, said in an interview.
The Dodd-Frank revamp legislation, passed last month by the House Financial Services Committee on a party-line vote, may make it through the GOP-controlled House.
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Democrats say it would end protections put in place after the 2008-9 financial crisis, intimidate regulators by removing their financial independence, and effectively kill a dozen bipartisan provisions by putting them in a bill that Senate Democrats are expected to block because of its objectionable provisions.
Republican leaders have said the deregulation bill would solve numerous worries about the financial system stemming from the crisis while allowing banks to more freely lend to invigorate the economy. It would also change the way federal law deals with failing financial institutions, which some critics say again supports a "too big to fail" approach.
Democrats defended the Dodd-Frank law, saying it has meant financial security for millions of people and that undoing it would encourage the kind of risky lending practices that invite future economic shocks. "Small, community banks give the majority of small business loans in this country", reads one press release from Ryan's office.
Federal regulators would also lose the power to dismantle a failing financial firm and sell off the pieces if they decide its collapse could endanger the system.
In many respects, Dodd-Frank was the forgotten disaster of the Obama years - the Obamacare of the financial markets.
Repeal the Volcker Rule, which banned proprietary trading by banks that take deposits. It would roll back a proposed rule that investment advisers put their clients' interests ahead of their own.
But Rep. Gwen Moore, D-Wisc., said the Republican talk about the bill helping community banks "is not fooling anyone". He has promised to pull a provision that eliminates the cap on fees that banks can charge retailers when customers use a debit card. It would no longer be able to write major rules regulating consumer financial companies, such as debt collectors, without getting approval from Congress. "Have you tried to get a mortgage recently?"
Overall, the Congressional Budget Office estimates that the House bill would reduce the deficit by almost $25 billion, partly by changing CFPB's funding but more substantially by eliminating the Federal Deposit Insurance Corp.'s ability to use a fund to stabilize a large, insolvent bank holding company and gradually wind it down. "They're harder to come by and they cost hundreds of dollars more to close". In the first quarter of 1984, there were 14,400 commercial banks in the U.S.
Republicans point out that the number of banks has declined under Dodd-Frank. Changes to Dodd-Frank will also need approval from posts in the Fed, FDIC, and Comptroller of the Currency, however, CNN reported, and many of those posts have not been filled.
A Republican push to overhaul United States financial rules put in place after the 2008 crisis is gaining momentum.
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