The Senate went ahead and passed the bill progressive opponents have labelled the Bank Lobbyist Act Wednesday afternoon, 67-31, with a final version that was negotiated off the Senate floor. No amendments were debated and voted on the floor. The bill, supporters say, will provide much-needed regulatory relief to community banks and credit unions. And yet, headlines like this one still dominate: "Congress rides to the rescue of thriving bankers: Banks have hauled in record profits for the last three years, according to data they report to the FDIC."
So what are they fixing? That remains a mystery.
Banks have hauled in record profits for the last three years and will be among the biggest winners under the new tax-reform law. Their loans are growing by 4 to 5 percent a year, well within historical norms. And even community banks, which the bill's backers say they're most concerned about, are making money.
Despite these signs of flourishing health, the deregulation bill passed the Senate in a 67-31 vote that included 16 Democrats and an independent, Angus King of Maine. The House will now take up the legislation. But critics of the bill say the facts undermine the case for rolling back key parts of the Dodd-Frank Act, the landmark law aimed at preventing a repeat of the 2008 financial crisis.
"I don't see the real-world problem [the bill] is trying to solve, except the problem of bankers' not making enough money," said Marcus Stanley, policy director at Americans for Financial Reform, who is among progressives warning that the bill poses potential risks to the financial system.
Supporters go back to the "community bank" line: "For someone in a small town in Montana, it could be meaningful if a bank can do more lending to a couple of key businesses," said Ian Katz, an analyst at Capital Alpha Partners. Because Capital Alpha Partners really cares about small town Montana. What they care about is Sen. Jon Tester (D-MT), who has turned into a pretty regular booster for Wall Street, for no reason that is immediately apparent. And, as even the Wall Street Journal pointed out before the bill passed, "Huge custody banks like BNY Mellon and State Street would be among the biggest beneficiaries." In fact, 25 of the nation's 38 largest banks are now not covered by the same rules as the behemoth banks.
The bill still has to pass the House, where Republicans will want an even better deal for the big banks. In fact, Rep. Jeb Hensarling (R-TX), Chairman of the Financial Services Committee, says he is not holding talks with key senators about what might be points of compromise that the House could pass that the Senate would accept in conference.
So it's not a done deal, which is the good news. The bad news is that 17 members of the Senate Democratic conference stuck with this sham.