WASHINGTON — The window for moving financial services regulatory relief through Congress is rapidly closing, but there appears to be little hope that the partisan tensions that have stalled the process will ease in time.
Republicans and Democrats alike appeared at a credit union conference on Wednesday, discussing the Dodd-Frank Act and the need for regulatory reform. While many said they support efforts to reduce the burdens on small banks and credit unions, divides over what that relief should look like remained stark.
"We had a bill in the Banking Committee that unfortunately became partisan because Republicans really wanted almost a wholesale repeal of major Dodd-Frank rules," Sen. Sherrod Brown, D-Ohio, ranking member on the Banking Committee, told attendees at the National Association of Federal Credit Unions' congressional caucus in Washington.
Indeed, all eyes are on the Senate and the fate of a sweeping regulatory package by Sen. Richard Shelby, R-Ala., chairman of the Banking Committee, which is pending before the chamber. Democrats, led by Brown, have unified in opposition to the bill, which passed out of the panel in May down party lines.
Despite repeated chatter about ongoing negotiations, there's little to suggest a compromise is soon in the offing. Democrats in both chambers have focused their attention around a much narrower set of proposals that helps the smallest financial institutions under $10 billion.
"We remain at an impasse with the majority in both chambers in finding common ground on responsible, commonsense regulatory relief proposals," said Rep. Maxine Waters, D-Calif., ranking member on the Financial Services Committee.
Sen. David Vitter, R-La., told credit union representatives that two factors led to the political stalemate. Democrats began to view the broader Shelby bill as "an assault on Dodd-Frank," at which point they "closed ranks" against the effort.
Second, he pointed to Sen. Elizabeth Warren, D-Mass., arguing that her "causing a ruckus" on several provisions worsened the divide, because she "scares the 'bejeebus' " out of fellow Democrats.
"They run like the building's on fire when that starts to happen," he added.
His tough words underscore the extent of partisan ire on the issue, given that Vitter has teamed up with Warren several times in recent months. Their bill to cap chief executive pay at Fannie Mae and Freddie Mac passed the Senate Tuesday night and they appeared together at a Cato Institute event later on Wednesday in support of a joint bill on Federal Reserve reform.
Observers will be watching in coming months to see whether a narrower regulatory relief package can move forward through regular order in the Senate, or whether Shelby can successfully attach his bill to must-pass legislation on the budget or other fiscal matters.
Rep. Bill Huizenga, R-Mich., meanwhile, raised similar concerns about Warren and the need for Senate action.
"There's some very loud, strong, prominent voices in the Senate — not to name names, but a particular New England senator who has declared Dodd-Frank off limits," he said. "It's all really going to depend on the Senate, whether they're going to stand up and say, we need to introduce commonsense changes to this bill, because it's not particularly working."
Huizenga's colleague from Michigan, Rep. Sandy Levin, a Democrat, offered broader warnings about the gridlock in Washington.
"There is a political crisis in the country, in my judgment — the political picture is more confused than it has been in a long time," he said. "Partisanship is deeper than any of the years that I've been in the Congress, and I think the only way it's going to be solved is with the election next year."