Summary: The Senate is preparing to end financial regulations put in place after the 2008 economic crisis.
The Senate plans to cut banking regulations passed as a response to the 2008 financial crash. According to the Washington Post, more than a dozen Democrats will join Republicans in this initiative, which is most likely to move forward.
In 2008, the United States entered an economic depression, and to fix this problem, Congress passed sweeping banking regulations, which the Washington Post called “one of President Barack Obama’s largest legislative achievements.”
The Washington Post said that Congress’ desire to end the current bank regulations is a sign that the financial industry has clout not only with Republicans but Democrats as well.
“Congress’s appetite for pulling back bank regulations shows the renewed clout of the financial sector in Washington, not just in the GOP but also among Democrats. Eight years after nearly every Senate Democrat backed a sweeping set of new rules for financial firms large and small, the party is now split, with moderates, several of them facing tough midterm election contests, working with the opposing party,” the Washington Post said.
The new bill will exempt financial institutions with assets between $50 billion and $250 billion from scrutiny from the Federal Reserve, and supporters of the legislation said that this would bring relief to companies that were treated like their larger counterparts. Critics said that removing this oversight could lead to problems that led to the 2008 recession, mainly predatory lending and investing.
“On the 10th anniversary of an enormous financial crash, Congress should not be passing laws to roll back regulations on Wall Street banks,” Senator Elizabeth Warren, a Democrat, said. “The bill permits about 25 of the 40 largest banks in America to escape heightened scrutiny and to be regulated as if they were tiny little community banks that could have no impact on the economy.”
While Republicans are all in favor of the bill, not all Democrats agree with Warren. Senator Jon Tester, a Democrat, said banks in Montana have been going out of business because of over-regulation created by Dodd-Frank, and he wanted to see a change, which he said would only affect smaller banks and not Wall Street.
“The Main Street banks, community banks and credit unions didn’t create the crisis in 2008, and they were getting heavily regulated,” Tester said.
The Senate is slated to vote on this initiative this week. The bill is led by the GOP.
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