Why Are Senate Democrats Backing the GOP’s Bank Deregulation Bill? | Thomas Jefferson Street | US News
At a time when Democrats at the grassroots level are more fired up and ready to go then they’ve been in years – spoiling for a fight with President Donald Trump and his cronies in the GOP – a group of Senate Democrats is joining with Republicans to, if you’ll believe it, deregulate banks.
Yes, instead of taking action on, say, gun control, the Senate this week will likely approve a rollback of the regulations adopted in response to the 2008 financial crisis. About a dozen Democrats are backing the effort, along with nearly every Republican, and the GOP is fishing for even more votes from the blue side of the aisle in the hopes of turning a win into a rout.
Let’s be clear: It’s no surprise that a government wholly controlled by the GOP wants to reduce bank regulations. But that Democrats are lending them a helping hand is a terrible policy and awful politics.
Democrats supporting this thing are making the case that it’s for the benefit of small, community banks, which are politically sympathetic and generally not the cause of global financial panics. Don’t buy it. While there are some bits of the bill that would reduce reporting requirements for small banks, it also includes big benefits for large financial institutions.
For instance, the bill would increase the amount of assets a bank needs to have in order to qualify for enhanced regulation from the Federal Reserve from $50 billion to $250 billion. This one move would exempt 25 of the nation’s 38 biggest banks from stronger supervision. The bill also includes an exemption from capital standards – essentially the amount of money that banks need to have on hand in case things go south – that benefits some big financial firms, and even more, are lobbying to be included.
That’s just the tip of the iceberg when it comes to the damage this bill would inflict. Read this piece by David Dayen at The Intercept for all the hoary details.
In addition to being very dangerous policy, this is very lousy politics. As senators like Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., have shown, the energy and vitality when it comes to the Democratic base is in preventing financial shenanigans, not encouraging them. Polls bear that sentiment out. There’s a reason no one who is considered a top tier 2020 Democratic candidate wants to touch this bank bill with a 100-foot pole.