How the House can still shape reg relief talks

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WASHINGTON — As lawmakers and congressional staff try to move a bipartisan regulatory relief bill to the finish line in the Senate, the House has mostly stood on the sidelines. But no one expects the lower chamber to just rubber-stamp the deal.

Most experts believe a final package will closely resemble the moderate version approved by the Senate Banking Committee in December. That bill, spearheaded by Chairman Mike Crapo, R-Idaho, was tailored to attract support from moderate Democrats. More than 30 amendments were offered to the bill during the panel vote, but the bipartisan coalition resisted efforts to change the bill.

In that bipartisan spirit, House GOP leaders have abandoned an approach to dramatically roll back Dodd-Frank Act. But they still seem intent on looking for openings to augment the Senate bill.

“It takes two chambers to birth a law," said Aaron Klein, a fellow at the Brookings Institution and policy director at the Center on Regulation and Markets.

House Financial Services Committee Chairman Jeb Hensarling, R-Texas, had previously tried to advance his Dodd-Frank overhaul bill, the Financial Choice Act, but that was a nonstarter with Senate Democrats.

Since then, the House committee has steadily moved piecemeal bills with bipartisan support, which total over 30. The choice for House leaders is whether to urge senators to incorporate such provisions in their bill, or pass a different version than the Senate and try supplementing the bill in a conference committee.

"Chair Hensarling’s reported focus on bipartisan bills should be viewed as a broad positive for the effort, but we caution that House GOP demands could add a layer of procedural complexity," Isaac Boltansky, an analyst at Compass Point, wrote in a research note. "The House GOP’s desired alterations to the package could conceivably be secured as part of the ongoing Senate negotiations or during a conference committee."

But the ultimate strategy for House leaders is uncertain. Most observers believe the Senate still is in the driver's seat, and House leadership does not want to railroad any deal by focusing too much on controversial provisions.

"Is the House going to accept the Senate bill," Klein said, or "is it going to ask for changes incorporated into what passes the Senate floor, or is there going to be a formal conference?”

Some observers said there may be room for adding House provisions supported by members of both parties that would not trigger objections from moderate Senate Democrats.

"Chairman Hensarling has shrewdly been moving individual pieces of the FCA through HFSC and the House in order to demonstrate the significant bipartisan support for individual provisions," wrote Dan Crowley, a partner at K&L Gates, in an email. "There are perhaps three or four dozen such provisions that are fair game for consideration in conference, and many could conceivably be added without jeopardizing the 60 votes necessary to pass the conference report through the Senate."

To be sure, many House provisions are unlikely to get anywhere in the Senate. For example, the House passed a measure by Rep. Blaine Luetkemeyer, R-Mo., to eliminate Dodd-Frank's numeric asset threshold for defining firms as "systemically important." While the Crapo bill would raise the cutoff to $250 billion, from $50 billion, removing it altogether is likely a nonstarter for some of the Democratic supporters.

The same is likely true with a House bill by Rep. Patrick McHenry, R-N.C., to address concerns from marketplace lenders stemming from the Madden v. Midland Funding court decision.

“The Senate Democrats who have co-sponsored the bill firmly believe it strikes the right balance between maintaining Dodd-Frank consumer protections and providing regulatory relief to small and midsize institutions,” said Tim Jenkins, a partner at Nossaman.

Yet other examples of bipartisan measures passed by the House committee are more moderate.

Klein left open the possibility of certain provisions being added or changed before the full Senate votes on the Crapo bill.

The Senate bill "right now has the votes to become law. As such, it also presumably has the votes to invoke cloture, by which amendments post-cloture must be germane," Klein said. (Invoking cloture limits debate and which amendments can be added.) "Now, you can have many germane amendments that are substantive, including amendments to strike part of the bill."

But the moderate Democrats in the Senate supporting the current deal hold considerable sway, since any provision not to their liking could risk the whole package.

"Each of the Senate Democrats who have agreed to support the Senate bill will effectively have a veto over any provision that might be added," Crowley said.

Boltansky said the more lawmakers try to change the version that Crapo has drafted with moderate Democrats, the more precarious the bill's future could be.

“There remain two clear risks to this package,” he wrote. “Uncertainty regarding Senate floor time and the associated process; and the potential for House Republicans to demand more sweeping changes than moderate Senate Democrats are willing to accept.”

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Regulatory relief Dodd-Frank Regulatory relief SIFIs Jeb Hensarling Mike Crapo House Financial Services Committee Senate Banking Committee