White House on Shelby banking plan: ‘We should be worried’

The White House signaled concern Wednesday over Senate Banking Committee chairman Richard Shelby’s proposal to overhaul financial regulations, with press secretary Josh Earnest saying the plan is something “we should be worried about.”

“This is an example of Wall Street interests” trying to undermine effective regulations, Earnest told reporters, a day after the Alabama Republican detailed a 216-page discussion draft of legislation.

Shelby’s bill is the most sweeping financial regulatory proposal since the 2010 Dodd-Frank Wall Street reform law. It would change how regulators classify banks that are “too big to fail.”

Shelby is calling for changes in the criteria used to designate systemically important financial institutions (SIFI), a classification that subjects the banks to more federal supervision. The bill would increase the SIFI-designation threshold from banks with $50 billion in assets to $500 billion, though the bill would give regulators some leeway to make exceptions.

The proposal aims to ease regulations on smaller banks and credit unions, while also making structural changes at the Federal Reserve designed to increase transparency and shift more influence to the central bank’s regional outposts.
 
Earnest said that Obama could work with Democrats like Sen. Elizabeth Warren (D-Mass.) on this “to make sure that we’re not putting taxpayers…on the hook.”

Shelby, meanwhile, intends to move legislation forward quickly, and is looking the panel’s moderate Democrats for crucial support. Democrats, meanwhile, have complained about not getting to see the language sooner.