WASHINGTON Democrats on the Senate Banking Committee unveiled legislation Tuesday to rival a plan by the panel's GOP chairman, signaling that the partisan divide over regulatory reform isn't likely to soften ahead of a key panel vote later this week.
The plan is a response to Chairman Richard Shelby's, R-Ala., legislative package, which would offer some regulatory relief for smaller and mid-sized banks and make changes to the Federal Reserve and the Financial Stability Oversight Council.
Democrats, including the White House, balked at the proposal, charging that it is too sweeping and that it includes controversial rollbacks to the Dodd-Frank Act that would benefit large institutions as well as community banks. All ten Democrats on the banking panel are expected to back the alternative plan, which would offer a much more limited set of changes for small banks and credit unions. The Democratic alternative runs 17 pages, compared with the Shelby bill, which spans more than 200 pages.
"Democrats are convinced that we can work on a bipartisan basis to help the smallest financial institutions, without harming safety, soundness, and consumer protection," Sen. Sherrod Brown, D-Ohio, the panel's ranking member, said in a press release. "Our targeted proposal would help Main Street financial institutions and better protect consumers in a manner that should win broad bipartisan support and be signed into law."
The bill would lengthen the annual exam cycle for institutions under $1 billion of assets to 18 months; give banks under $10 billion safe harbor for mortgages held in portfolio under the Consumer Financial Protection Bureau's "qualified mortgage" rule; require banks to send out annual privacy notices only when the disclosures change; allow privately insured credit unions to join the Federal Home Loan Bank system; change Securities and Exchange Commission registration and deregistration thresholds for thrifts; and provide mortgage lenders a 120-day grace period for completing required tests when moving from a bank to a non-bank.
The legislation would also allow the CFPB to enforce the Servicemember Civil Relief Act, permanently extend a tenants' rights law for when a property goes into foreclosure and give state regulators access to a national mortgage database while maintaining confidentiality for any shared information shared.
Still, while the provisions included in the Democratic proposal are relatively uncontroversial many having won bipartisan support in the past and some are even included in Shelby's plan it's very unlikely the bill will be successful in the GOP-controlled Congress. Republicans are expected to continue their push for more wide-ranging changes to the banking industry and the Dodd-Frank Act, whether through regular order or the appropriations process later this year. The Banking Committee will vote on the Shelby bill and the Democratic alternative on Thursday, with support largely expected to cut down party lines.
Meanwhile, the Banking Committee released a factsheet Monday evening on "myth vs. reality" regarding Shelby's legislation, in an effort to clear up what supporters argue are misconceptions about his bill.
The factsheet clarifies provisions of the bill detailing changings to a $50 billion Dodd-Frank threshold for heightened prudential standards and the CFPB's qualified mortgage rule, in addition to its reforms to the Fed and the FSOC.