Senators from both parties who have worked together to pass legislation easing regulatory burdens on banks are now split on whether and how to negotiate with the House to pass their bill and send it to President Trump’s desk.
Jeb Hensarling of Texas, the conservative chairman of the House Financial Services Committee, has said the House won’t rubber-stamp the legislative package that passed the Senate with 17 votes from Democrats after months of delicate negotiations. Instead, he’s looking to get more bills that passed the House with bipartisan support included in final legislation.
Senate Democrats say they will abandon the effort if Hensarling insists on significant changes. Amid pressure from the banking industry to deliver a victory, some Senate Republicans, too, would prefer that the House simply pass the Senate bill.
But not all Republicans agree. On Tuesday, Republican Banking Committee member Bob Corker of Tennessee indicated that he’d be willing to see Hensarling negotiate with the Senate on a final bill that would include more House measures.
“The Democrats in the Senate are not going to want to vote to go to conference if they think it’s going to be the Wild West,” said Corker, who spoke with Hensarling Tuesday. “But if it’s pre-conference, which is what he’s willing to do, I don’t know why they would object to at least sitting down and understanding” Hensarling’s requests.
Under Hensarling’s leadership, House Republicans last year passed sweeping legislation, the Financial CHOICE Act, that would have mostly replaced the 2010 Dodd-Frank Act that imposed new rules on the financial system, putting a much more conservative, limited regulatory framework in its place.
But the CHOICE Act isn’t in consideration. Instead, Hensarling is aiming to pass some of the scores of much more modest bipartisan bills that the House cleared after the CHOICE Act. Dozens of those bills were included in the Senate bill, which would lessen mortgage and other rules for small banks and require less exhaustive oversight for regional banks like SunTrust and Fifth Third Bank. But many other House-passed bills were left out.
Some of the bills passed unanimously, such as a measure authored by Rep. Carolyn Maloney, D-N.Y., that would make investing easier for family offices that manage funds for the wealthy.
Others would cost precious Democratic votes in the Senate, which cannot pass legislation without Democrats’ help. One bill, for instance, co-sponsored by Rep. Gregory Meeks, D-N.Y., would ensure that nonbank firms around the country, such as payday lenders, would continue to be able to charge very high interest rates on loans. Meeks said Tuesday that he’d be interested in House-Senate negotiations — “not opening it up for everything, but those bills where there’s support on both sides.”
Senate Democrats would prefer not to have to sort between House bills they’d support and ones they wouldn’t.
Mark Warner, a Virginia Democrat on the Banking Committee who helped negotiate the package with Republican chairman Mike Crapo of Idaho, would encourage all 17 Democratic supporters to vote against the bill if Hensarling makes “any significant changes,” a spokeswoman said. The representative did not explain what would constitute a significant change.
The offices of other Democrats on the Banking Committee, including Heidi Heitkamp of North Dakota, Joe Donnelly of Indiana and Doug Jones of Alabama, did not respond on the record to requests for comment on the potential for additional House bills.
Hensarling has said the House won’t pass the Senate bill until senators negotiate over the measures he wants included, and that he has the support of Speaker Paul Ryan, R-Wis. Other GOP members of the committee, too, have joined him in saying that more House bills should become law.
“Chairman Hensarling offered to negotiate inclusion of House bills before the Senate bill was passed. That did not happen,” a Hensarling spokesman said. “Chairman Hensarling is not fighting for himself; he’s fighting on behalf of the whole House — including the Democrat sponsors, co-sponsors, and supporters of these strong, bipartisan bills.”
Nevertheless, as Hensarling holds out for negotiations with the Senate, he is likely to come under increasing fire from bank lobbyists eager to secure long-awaited victories.
Last week, GOP Sen. Thom Tillis of North Carolina, a member of the Banking Committee, lobbied House leaders to simply pass the Senate measure, according to the Wall Street Journal. He told them that any additional provisions could endanger the bill by costing Democratic support.
The problem is that there is “tremendous headline risk” in having the bill dangling in the House, said Paul Merski, head of the congressional relations team for Independent Community Bankers of America, a group that represents small banks. That means one bad news story about bank misconduct could sap any momentum for passing the legislation this Congress, undoing the work that community bankers have put in over the past four years to try to negotiate relief from the post-crisis rules.
Lobbyists also worry that House-added changes would require another vote in the Senate, subjecting Democrats to another withering round of criticism from Elizabeth Warren, D-Mass., who accused them of risking another financial crisis to aid big banks.
Congressional liberals contend that the Crapo bill would cut back rules on big banks, both by lessening oversight on regional banks and by directly affecting the regulation of megabanks like JPMorgan Chase and Citigroup.
Nevertheless, Banking Committee member Sen. Pat Toomey, R-Penn., sounded sympathetic to Hensarling’s efforts and downplayed the problems it could create for the upper chamber.
“We’ve got time, we just passed this,” he said. “Let’s see how it all works out.”
