WASHINGTON — Regulatory relief is arguably one of the most popular ideas in Congress — embraced by most Republicans and plenty of Democrats — but it has also proven to be frustratingly difficult for lawmakers to enact.
Democratic presidential nominee Hillary Clinton again pledged Tuesday to grant relief to small banks and credit unions if elected president, making her most high-profile commitment to the idea yet.
Yet analysts and industry representatives were skeptical of her ability to help get it over the finish line. Trapped between Republican lawmakers who are likely to push further than Clinton wants to go and progressive Democrats like Sen. Elizabeth Warren, D-Mass., who appear skeptical of the need for relief, a Clinton administration doesn't have much leeway.
"They don't have a lot of wiggle room," said Ed Mills, a financial policy analyst and managing director at FBR. "We've gone eight years without really differentiating between the size of banks. In D.C., they think banks are bad. We have a liberal wing of the party that views [Clinton] with skepticism in reference to banks. … I don't see anything legislatively happening."
Roger Beverage, the head of the Oklahoma Bankers Association, agreed it was tricky.
"It depends entirely on how Sen. Warren and other progressives react to [Clinton's] plan," said Beverage. "I want to believe that Secretary Clinton is serious about streamlining regulations and cutting red tape for community banks. The cynic in me says this pledge is meaningless, even though it's in writing, because she will not spend a lot of political capital with Democrat leaders on the Hill to make it happen."
Others were less pessimistic but questioned Clinton's commitment to regulatory relief. In her op-ed, the Democratic nominee said regulatory relief was critical to helping small businesses gain access to credit.
"My plan will reduce unnecessary regulations on local community banks and credit unions, while defending the tough new rules on big Wall Street banks," she said.
But Brian Gardner, a managing director with Keefe, Bruyette & Woods, suggested that was little more than a "campaign slogan."
"It's not legislation; it's very skimpy on detail," he said. "People are looking in the wrong place. This is one area that the Hill is going to have a lot of input."
And the shape of Capitol Hill has yet to be determined. It's unclear, for example, if Democrats will regain control of the Senate. If they did, Sen. Sherrod Brown, the progressive Democrat from Ohio, likely would be in position to take leadership of the Senate Banking Committee. Brown has been a vocal supporter of regulatory relief for smaller banks — but his definition of it differs significantly from that of Republican colleagues.
If Republicans maintain control, meanwhile, Sen. Mike Crapo, R-Idaho, likely would assume leadership of the banking panel. It's unclear if Crapo would take up the recently debated regulatory relief bill authored by current Chairman Richard Shelby, R-Ala., or start over on his own. (Shelby is limited under Republican rules from becoming chairman of the Senate Banking Committee next year.)
On the House side, it's almost certain that the GOP will keep control of that chamber. That would leave a Clinton administration — if she wins — to negotiate with the House Republican caucus. The House GOP favors Financial Services Committee Chairman Jeb Hensarling's regulatory relief bill, which includes several provisions Democrats have rejected.
It remains to be seen whether Clinton could find common ground between the various players in Congress. Industry representatives said it would come down to how high a priority Clinton would make it.
"Since most true community bank regulatory relief issues are largely bipartisan, if the White House makes community bank regulatory relief a priority, then I think the prospects for seeing meaningful community bank regulatory relief are very good," said Camden Fine, president of the Independent Community Bankers of America, who was supportive of Clinton's remarks in favor of regulatory relief.
But Fine acknowledged that Clinton's plan — which included other elements, such as granting relief to student loan borrowers and expanding tax credits to help community development financial institutions — "would be a heavy lift for any White House."
Still, "anything is possible if the White House pushes hard enough," Fine said. "If the White House has the will, there will be a way."
Beverage said that if Sen. Chuck Schumer, D-N.Y., becomes Majority Leader, there may be enough room to make a deal.
"The optimist in me says that because Senator Schumer seems to favor some sort of bifurcated regulatory system, based on business operating model and risk profile, we just might get something simple across the finish line this time, with his help," he said.
Dan Berger, the head of the National Association of Federal Credit Unions, also praised Clinton's call for relief.
"We applaud Secretary Clinton's recognition of the importance of credit unions as a resource for capital for small businesses," he said in a statement, adding that "nearly a credit union a day is disappearing due in large part to the overwhelming regulatory burden."
But any bank legislation — no matter how targeted toward small banks — is likely to stir up the debate over restoring the Glass-Steagall Act, which separated commercial and investment banking and was repealed under Clinton's husband, President Bill Clinton.
Notably, Clinton's plan released Tuesday made no mention of Glass-Steagall, even though restoring the Depression-era law was part of the Democratic National Committee's platform. That issue will inevitably come up, however.
"If you assume that the Senate can pass a regulatory relief bill for community banks, then the Warren wing of the party is going to be waiting," Gardner said. "That's their opportunity to pass a new Glass-Steagall. Then the question will be for the rank-and-file Republicans," most of whom oppose a resurrection of Glass-Steagall, "Is that worth the price?"
Analysts also noted that Clinton released a fact sheet with her op-ed that specifically mentioned the opportunities for credit expansion presented by fintech firms.
The Clinton campaign wants to "harness the potential of online lending platforms and work to safeguard against unfair and deceptive lending practices," the fact sheet said.
Some fintech players saw her recognition of online lending — the first apparent mention by either presidential candidate of the new sector — as important.
"I applaud Secretary Clinton for understanding the impact that online lenders have had on our small-business economy, and it's significant that a major party presidential candidate is including innovative lenders as part of a holistic plan to boost the economy," said Glenn Goldman, CEO of the small-business lender Credibly and former chief executive of the online lender CAN Capital.
Gardner saw the Clinton reference as a nod to Silicon Valley, which has been the primary driver behind fintech. But it's not clear what — if anything — will come of it if she's elected president, he said.
"It's very much in line with what the banking regulators have been talking about," Gardner said. "It's more rhetoric, but the rubber hasn't hit the road yet."