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Flake Votes to Advance Bill to Cut Regulations on Banks

A version of the new Senate banking bill has already passed the U.S. House. (treptoweralex/pixabay)
A version of the new Senate banking bill has already passed the U.S. House. (treptoweralex/pixabay)
March 7, 2018

PHOENIX — Arizona's Jeff Flake was one of 67 U.S. senators to vote Tuesday to start debate on the biggest banking reform bill since the financial crisis in 2008.

Senate Bill 2115, formally called the Economic Growth, Regulatory Relief, and Consumer Protection Act, lifts the most stringent regulations, including the so-called stress tests on banks that have between $50 billion and $250 billion in assets. The rules were put in place to prevent any future chain-reaction meltdowns such as the ones that led to the recession.

Carter Dougherty, communications director for the nonprofit Americans for Financial Reform, said opponents of the reforms Congress passed in 2010 have been gunning for them ever since.

"There's been lobbying by the bank lobby since day one after Dodd-Frank was passed to try and water it down,” Dougherty said. “And this is the first time they've gotten as far as a vote in the Senate - and, unfortunately, it was a bipartisan vote."

Dougherty said a recent study showed that Wall Street spent more than $2 billion to influence decision makers in Washington during the last presidential election, not counting unreported dark money. The website shows that Sen. Flake has taken more than $68,000 from commercial banks in the 2017-2018 election cycle, the 14th-highest amount of any U.S. Senator.

Supporters of the reforms say the Dodd-Frank regulations were an overreaction, and the cost to comply is too high for banks.

Dougherty noted that medium-sized institutions such as the now-defunct Countrywide were at the heart of the problem in 2008. He said banks these days are riding high despite the current rules.

"There is no evidence that this is stifling lending or, for that matter, bank profitability,” he said. “American banks had the most profitable year on record last year. Lending is healthy, so there’s no valid, substantive reason to suddenly start relaxing the rules."

The Federal Reserve estimated that, long term, the recession wiped out between $7.5 trillion and $19 trillion in wealth, which translated to millions of Americans losing their homes, jobs and/or savings.

Suzanne Potter, Public News Service - AZ