No sooner had Senate Banking Chairman Richard Shelby released the text of his sweeping regulatory relief bill than it was opposed by the top Democrat on the panel.
Shelby’s bill posted Tuesday includes changes to the 2010 Dodd-Frank financial reform law as well as significant reforms to other parts of the regulatory landscape.
The Alabama Republican has said that he aims to provide “relief” to community banks, and the bill would do that by raising the threshold for what is considered a community bank and exempting small banks from a number of rules. It also would make significant changes to the Federal Reserve, the Dodd-Frank process for identifying financial firms that pose a threat to the financial system, the government’s management of the bailed-out mortgage companies Fannie Mae and Freddie Mac, and much more.
Sen. Sherrod Brown, the ranking Democrat on the committee, said Tuesday shortly after the draft was made public that it was “a sprawling industry wish list of Dodd-Frank rollbacks.”
“This sweeping proposal holds Main Street financial institutions hostage to a partisan effort to dismantle Dodd-Frank’s consumer protections and sensible rules for the large banks and non-banks that played central roles in the financial crisis,” the Ohio senator said about the draft legislation.
A mark-up of the bill had been scheduled for this week, but the committee’s Democrats objected as a group last week to working on the legislation until they all had received the text. Shelby subsequently delayed the mark-up until May 21.
Democrats, including critics of Wall Street practices such as Brown and Massachusetts Sen. Elizabeth Warren, have raised concerns that efforts to relieve small banks of regulatory burdens might be used as vehicles for rolling back rules on megabanks.
Nevertheless, moderate Democrats on the panel and in the Senate will feel pressure from the banking and insurance industries to support legislation to ease rules on their firms.
