Congress approved to roll back the Dodd-Frank law, a huge legislative victory for Trump, fulfilling one of his campaign promises.
On Tuesday the rollback was decided when the house voted and 258-159 votes were cast by the members. This was a Republican-led legislation but they managed to secure 33 votes from House Democrats as well, same was the case in Senate where the Democrats were divided into two factions and Senate voted on the bills approval by 67-31.
‘Big legislation will be signed by me shortly,’ Trump tweeted Wednesday. ‘Big changes to DODD FRANK.’
After the 2007-2009 recession, the law was passed to increase the threshold on big banks which were capable of causing economic havoc and were made to follow strict capital and planning requirements. It regulated the banks and put their control in the hands of the government to prevent future meltdowns. This rollback will not likely loosen those restrictions on bigger banks, though for small banks it will loosen the restriction and will help boost the economy.
This legislation’s main aim is to help medium and small-sized banks, but the critics are skeptical because there is a likelihood of future taxpayer bailout once the bill becomes the law. Once this bill will become law the small scaled banks will not be required to undergo stress tests, the threshold for stress test has been raised from $50 billion to $250 billion. These stress tests determine the ability of the bank to evade the situation of financial crisis. It will ever not require the small lenders to evade certain disclosures, creating some leeway for them.
The banks having 500 or fewer mortgages a year will not require reporting to the federal government – some home loan data. Trump said that it will make small banks and credit unions more strong and vibrant.
The Dodd-Frank Act was passed, it increased government’s oversight of banks.
‘This is not a bill that benefits consumers. It is a big-bank bonanza,’ Representative Al Green, D-Texas, told in the debate on the House floor before the vote.
Mitch McConnell, a United States senator, tweeted: ‘For years, the Obama-era Dodd-Frank rules designed for Wall Street made life needlessly difficult for lenders on Main Street. But today, we’re one step closer to delivering relief. My statement on House passage of Chairman @MikeCrapo’s reforms to Dodd-Frank.’
This victory is being cherished by the Republicans, only one Republican voted against the bill Representative Walter Jones from North Carolina.