The House voted Friday to allow community banks to escape one of the biggest regulations imposed by the 2010 Dodd-Frank law.
Republicans joined with 78 Democrats to pass a bill sponsored by Rep. French Hill, R-Ark., to revise the “Volcker Rule,” the regulation that restricts banks’ ability to speculate in the market with deposits insured by the federal government. The rule is meant to prevent banks from making risky bets that are effectively backstopped by taxpayers.
The bill, which passed 300-104 just before lawmakers left for the weekend, is one of several bipartisan measures the House passed this week that would alter the Dodd-Frank law.
“We’re bipartisan, we’ve compromised, we’ve brought both sides together, we’ve improved the bill,” Hill said on the House floor.
“I wish it were repealed, but that’s not possible right now,” he added of the Volcker Rule.
Republican leaders in the House have said they hope for negotiations with the Senate to attach some House-passed bills to package of regulatory reforms that the upper chamber cleared last month with 17 Democratic votes.
Senators so far have resisted including bills advanced in the House, and argue that their package of relief measures for community and regional banks is carefully negotiated and would be upset by involving House negotiators.
House Financial Services Chairman Jeb Hensarling, meanwhile, has demanded negotiations with the Senate to include more House-passed provisions in the final bill, and has said he has the support of leadership not to simply pass the Senate’s bill.
Friday’s legislation would mirror a provision in the Senate bill, but go a little beyond it.
It would exempt community banks from the Volcker Rule, as the Senate bill would do. But it would also make the Federal Reserve the sole authority for writing regulations to implement the rule, rather than the five agencies involved today.
Proponents argue that the rule is too onerous for small banks that don’t engage in many nontraditional banking activities, and that lifting it would allow them to provide more liquidity to customers.
