WASHINGTON (Reuters) – The US House of Representatives passed on Tuesday bipartisan legislation that would ease bank rules introduced in the wake of the 2007-2009 financial crisis, giving President Donald Trump a major legislative victory.
The vote eases some of the 2010 Dodd-Frank rules that have hurt smaller banks and community lenders and keeps the Republican president’s promise to try to spur more economic growth by cutting regulation, but does little for Wall Street.
It is a far cry from the repeal that Mr Trump pledged on the campaign trail, leaving largely untouched the core Dodd-Frank provisions designed to ensure financial stability and other rules most hated by banks and conservative Republicans.
But industry lobbyists say Mr Trump’s administration played a key role in getting the bipartisan legislation, which had been under discussion for years, across the finish line.
The bill, which was approved by the Senate in March after securing the backing of 17 Democrats, marks the first attempt to revise rules that aimed to prevent a repeat of the crisis that saw Wall Street lenders bailed out to the tune of $700 billion.
Republican critics say Dodd-Frank went too far and curbs banks’ ability to lend, hurting economic growth, while many Democrats say it provides critical protections for consumers and taxpayers.
Speaking to reporters on Tuesday evening, White House officials hailed the legislation as another “milestone” in the administration’s mission to “revitalize the US economy” by lifting barriers to business.
They said Mr Trump aims to sign the bill into law at a formal ceremony within the week.
The bill, approved 258-159 in the House on Tuesday, raises the threshold at which banks are considered systemically risky and subject to stricter oversight to $250 billion from $50 billion. It also eases trading, lending and capital rules for banks with less than $10 billion in assets.
But it does not weaken the top US consumer watchdog created by Dodd-Frank that has been consistently attacked by Republicans who say it oversteps its mandate.
Touching the Consumer Financial Protection Bureau was a red line for Democrats, according to lobbyists.
Nor does the bill weaken Wall Street’s obligation to comply with the so-called Volcker Rule banning banks from making risky bets with their own money, or limit the ability of regulators to apply stricter rules to large institutions they deem critical to the financial system.
Speaking to Reuters on Tuesday, Democratic US Senator Heidi Heitkamp, a key backer of the bill, said it aimed to fix problems with Dodd-Frank, not to weaken it.
“That’s going to improve Dodd-Frank not diminish or begin to erode Dodd Frank,” she added.
Still, some larger players secured a handful of niche provisions, most notably the nation’s largest custody banks.
The bill will allow the likes of BNY Mellon, State Street Corp and Northern Trust to exclude customer deposits they place with central banks from a stringent capital calculation requirement, potentially offering major capital relief.
