Senate Democrats unveiled a competing plan to tweak financial regulations Tuesday, as a key panel prepares to revisit the Dodd-Frank financial reform law.
The plan offered by Democrats on the Senate Banking Committee is aimed at providing smaller banks with relief from some regulatory requirements, and serving as competition to another plan unveiled by Sen. Richard Shelby (R-Ala.), the panel’s chairman.
{mosads}The Democratic version is much more modest than Shelby’s proposal, which proposed broad changes to several financial regulators, and was more aggressive in reducing the reach and impact of Dodd-Frank. The Democratic bill runs 17 pages, while Shelby’s draft is 216 pages long.
The Banking panel is set to consider Shelby’s bill Thursday.
Democrats, including many on the panel and the White House, have criticized Shelby’s plan as dismantling key parts of that law, and instead are billing their plan as properly targeted legislative relief for small community banks and credit unions.
“Democrats are convinced that we can work on a bipartisan basis to help the smallest financial institutions, without harming safety, soundness, and consumer protection,” said Sen. Sherrod Brown (D-Ohio), the ranking Democrat on the panel. “Our targeted proposal would help Main Street financial institutions and better protect consumers in a manner that should win broad bipartisan support and be signed into law.”
Brown said the Democratic alternative has the backing of all 10 Democratic members of the Banking Committee, and many of its provisions are pulled directly from bills cosponsored by some Senate Republicans.
The Democratic proposal would exempt small financial institutions from new “qualified mortgage” rules that would expose banks to legal challenges if they offered mortgages that did not meet certain requirements. However, some mortgages seen as riskier, like loans that do not require documentation or ones that charge “excessive” fees or interest rates, would be ineligible.
The bill would also exempt smaller institutions from having to send annual privacy notices to accountholders, and provide more time between regular bank examinations.
And while Shelby’s bill would place new restrictions and requirements on the Consumer Financial Protection Bureau, the Democrats’ bill would actually boost its power, ensuring the agency can protect service members from financial fraud.