Thursday was a day of celebration for the banking industry.

Nearly eight years after the Dodd-Frank Act was signed into law, the first bill to make significant changes to that statute finally made its way to the White House. Bankers and their industry representatives took to social media to trumpet their victory.

Yet not every part of the industry has reason to celebrate. Though the new law marks an unequivocal win for small and regional banks, it does relatively little to help the biggest banks.

But that wouldn’t have been obvious listening to the rhetoric of progressive Democrats who opposed the bill.

“Today, special interests win again,” said Sen. Sherrod Brown, the lead Democrat on the Senate Banking Committee. “The president signed into law a giveaway that loosens rules for the same big banks that helped crash the economy a decade ago, leaving Americans taxpayers responsible for a $239 billion bailout. Banks are making record profits and hardworking Americans shouldn’t have to pay for favors to Wall Street, foreign megabanks and their lobbyists.”

Sen. Sherrod Brown, D-Ohio
Sen. Sherrod Brown's commentary that the reg relief law is a win for Wall Street is a clear sign of where the Democrats will aim when they eventually retake power in Washington. Bloomberg News

That view is nothing new, as progressives have long sought to portray the law as a Wall Street giveaway. And though there are only a few controversial provisions that might benefit larger institutions, arguments over how much it truly benefited megabanks are also beside the point.

Because going forward, the liberal Democratic line on this bill will be that it did so, and the vast majority of the base will believe it. That will have repercussions in the elections ahead.

Predicting politics is a tricky business — just ask any prognosticator of the 2016 race. But whether it’s in 2018, 2020 or beyond, the pendulum will eventually swing back to the Democrats. When it does, it’s almost guaranteed the party will be aiming at the biggest banks in the country.

Though banks are tired of the accusations that they caused the crisis and paid no price for it, that argument still resonates deeply with a significant portion of the American public — the same portion that is likely to vote Democrat in future elections.

Anyone who doubts that should look at social media this week.

And partisans were angry at the moderate Democrats who supported the bill, including Sen. Doug Jones of Alabama.

What all this means is that when it comes time to take power again in Washington, Democrats are unlikely to target the small banks that gained under this bill nor even attack the law’s most significant measure, which raised the SIFI threshold to $250 billion of assets.

When they’re back in power, Democrats will instead be looking to get tough again on the biggest banks — and show their base they mean business. It’s not clear what form this will take, whether another Sanders-led push to break up the biggest institutions, another increase in their capital requirements or a revived push for postal banking.

But one thing is certain. Though big banks received little in this bill, there will be a reckoning for it anyway.

Bankshot is American Banker’s column for real-time analysis of today's news.

Rob Blackwell

Rob Blackwell

Rob Blackwell is the editor-in-chief of American Banker.

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