GOP chairman: House won’t vote on Senate bill to loosen Dodd-Frank unless senators negotiate

A top Republican chairman said Thursday that House Speaker Paul Ryan (R-Wis.) will hold a recently passed Senate bill to loosen strict banking rules unless senators are willing to cut a deal with the lower chamber.

House Financial Services Chairman Jeb Hensarling (R-Texas) told reporters that Ryan said the bipartisan Senate bill to rollback the Dodd-Frank Act will “stay on his desk” unless senators agree to negotiate with the House.

“We’re not rubber stamping the bill,” said Hensarling, a close Ryan ally. “It’s got to be bipartisan and bicameral.”

The Senate passed on Wednesday the most sweeping changes to Dodd-Frank to earn bipartisan support. The bill, sponsored by Senate Banking Committee Chairman Mike Crapo (R-Idaho), was backed by 13 Democrats and would exempts dozens of banks from tougher federal oversight.

House Republicans have insisted that the Senate add a slew of Financial Services panel bills that passed with at least some bipartisan support. Hensarling cited more than two dozen bills from his panel that Democrats backed overwhelmingly or, in some cases, unanimously.

A spokeswoman for Crapo declined to comment. 

Moderate Senate Democrats behind the bipartisan bill say they’re not willing to reopen the bill with the House and would disown major changes. They say excessive tinkering would break the fragile bipartisan balance behind their deal.

“If you go to completely different bill in the House, what you’re actually doing is ensuring that nothing will happen,” said Sen. Joe Donnelly (D-Ind.) last week.

Hensarling said senators were being “presumptuous and naive” to think the House wouldn’t demand changes and assert its role as an equal chamber of Congress.

“I would be happy to share with them a copy of the Constitution,” Hensarling said. 

While weakening Dodd-Frank has been a major Republican goal since the law passed in 2010, the House and Senate took different paths to attack the banking rules enacted by former President Obama.

House Republicans, led by Hensarling, sought to repeal or rewrite as much of Dodd-Frank as possible, insisting the law had stifled economic growth and devastated the most vulnerable financial institutions.

Their plan, the CHOICE Act, would have transformed or eliminated major parts of Dodd-Frank. The bill would allow banks that reach certain cash thresholds an off-ramp from Dodd-Frank, reduce the frequency of federal stress tests and restrain oversight powers of several federal agencies that the 2010 law expanded.

The CHOICE Act would have also placed strict limits on the Consumer Financial Protection Bureau (CFPB) and its funding.

The bill passed the House in 2017 and was immediately dismissed by the Senate as too conservative to pass the upper chamber. The GOP’s narrow Senate majority meant any bill to reel in Dodd-Frank would need Democratic support to avoid a filibuster.  

Senators instead released the Crapo bill in November with a dozen Democrats sponsoring the measure.

The immediate support of Democrats ensured the bill would pass the Senate over the criticisms of liberal colleagues, but the law did far less to change Dodd-Frank. Dozens of banks would have been exempted from some of the strictest parts of the 2010 law, but the bill didn’t address the CFPB and other Republican priorities.

Senate Democrats behind the measure said they expected the House to pass their bill, perhaps with pressure from President Trump, since the bill had enough bipartisan support to clear their chamber. 

“I respect that some House Republicans want to amend our legislation, but doing so would unfortunately prevent Congress from achieving the shared goal of providing relief for community banks and credit unions,” Sen. Heidi Heitkamp (D-N.D.) in a Thursday statement. “Our bill is the way to reach that bipartisan result that can actually pass in both chambers and become law.”

House Republicans pushing for changes insist the Senate bill should be a starting point, not an end result. They insist that adding other bills that earned bipartisan support in the House shouldn’t cost votes in the Senate.

“Why in the world is this viewed as the ceiling, not the floor?” said Rep. Bill Huizenga (R-Mich.), chairman of the Financial Services panel’s capital markets subcommittee.

Rep. French Hill (R-Ark.), another leading Financial Services Republican added, “Why would we also not allow our members in the House — Democrats and Republicans — to add their ideas on the same basis?”

Updated at 5:12 p.m.