WASHINGTON — The House Financial Services Committee passed more than twenty bills on Thursday, some of which could end up as part of a Senate regulatory relief package.
After the House passed a mammoth relief bill in June, the Financial Choice Act, it has pushed forward on passing individual measures that enjoy bipartisan support.
One of the bills that will likely garner attention is legislation that would get rid of the Dodd-Frank Act's $50 billion asset threshold for designating financial institutions as systemically important, a designation that subjects them to higher regulatory requirements.
“This is clearly one of the most important bills we will consider,” Financial Services Committee Chairman Jeb Hensarling, R-Tex., said Thursday. “There has been a growing consensus over a number of years that the $50 billion threshold was the wrong mark.”
The bill, put forward by Rep. Blaine Luetkemeyer, R-Mo., passed 47-12 with the support of 13 Democrats. It would replace the threshold with an indicator test that focuses on measures including size, interconnectedness, cross-border activities and complexity. The eight largest U.S-based banks that are considered global systemically important institutions would still be subject to the tougher Dodd-Frank requirements.
While it is unclear if the bill would be included as part of a deal that Senate Banking Committee Chairman Mike Crapo, R-Idaho, is working on with Sen. Sherrod Brown, D-Ohio, industry groups were optimistic after some Democrats supported the measure in the House.
Rep. Joyce Beatty, D-Ohio, endorsed the bill on Wednesday,calling the $50 billion threshold “ill-advised” and arguing the same standards that are applied to the money center banks shouldn’t apply to “smaller regional banks that serve our communities.”
However, the House panel's top Democrat, Rep. Maxine Waters of California, said the bill “goes way too far in reversing strong oversight of the nation’s largest banks” and added that it would make it harder for community banks to compete against large regional banks.
Other Democrats, including Rep. Gwen Moore of Wisconsin, said they were on the fence. Moore said she supported the goal of the bill, but had reservations because it would put the Financial Stability Oversight Council, which will soon be populated by Trump administration appointees, in charge of making SIFI determinations.
“We are taking the training wheels off … and it is really not clear that under this administration that the FSOC is going to roll with regular order,” Moore said. “This is my unreadiness to vote for this bill today.”
She added that she wanted to discuss the bill further with Democrats on the Senate Banking Committee before making a decision on whether she will support the bill on the House floor.
Other bills that were approved by the panel include the Tailor Act sponsored by Rep. Scott Tipton, R-Colo., which directs regulators to tailor regulation to an institution’s risk profile and business model, and another measure by Rep. Lacy Clay, D-Mo., that would raise the threshold for banks subject to the Consumer Financial Protection Bureau’s examination authority to $50 billion from $10 billion.
A bill that would effectively end an Obama-era program aimed at choking off certain industries, including payday lenders and gun dealers, also received strong support; it was approved 59-1.
The financial services industry widely approved of the House panel vote on Thursday.
“These bills will help modernize and tailor the financial regulatory system to better serve Americans and drive more robust economic growth here at home,” said Anthony Cimino, the head of government affairs at the Financial Services Roundtable.