Photo: AP

The New York Times reports that a group of Senate Democrats is helping the Republican effort to roll back the Dodd-Frank bank regulations signed by President Obama in the wake of the 2008 financial crisis. The new proposal would raise the threshold for extra regulatory scrutiny from $50 billion in assets to $250 billion, “leaving fewer than 10 big banks in the United States subject to the stricter oversight,” according to the paper.


According to the Times, the bill’s supporters argue it would “offer much-needed relief to small banks and credit unions in parts of America that have been struggling under regulations that had primarily been aimed at the biggest banks.” That’s right: Every bank smaller than the 10th biggest bank in America is now a struggling small bank, just trying to make ends meet. Banks worth between $50 billion and $250 billion would no longer have to worry about proving to regulators that they could survive another crash, which is definitely absolutely never going to happen again. The bill would also allow banks with less than $10 billion to make “risky bets with federally-guaranteed deposits,” which sounds great and definitely like a thing that needs to happen.

A similar bill passed in the House in December, with 59 Democratic votes. At the time, the Center for American Progress’ Gregg Gelzinis wrote that the bill would “effectively deregulate 30 of the 38 largest banks in the country”:



The 30 banks deregulated by this bill hold a combined $5.3 trillion in assets, or roughly 25% of the total assets in the banking sector. Collectively they received $65 billion in TARP bailout funds and hundreds of billions more in additional forms of government support. This universe of banks deregulated by the bill also includes the U.S. holding companies of systemically important foreign banks like Credit Suisse, Deutsche Bank and HSBC. These scandal-plagued foreign banks should be some of the last banks policymakers consider deregulating.


Meanwhile, Sen. Heitkamp (D-N.D.) told the Times yesterday that “A lot of what was Too Big To Fail under Dodd-Frank became ‘too small to succeed’ because of the onerous regulatory burdens.” See? They’re doing it for all the little guys out there, like HSBC’s U.S. holding corporation.



How, exactly, does allowing a bank with $9 billion in assets to make riskier federally-backed bets, or freeing American Express from tougher oversight of their ability to survive an economic downturn, help the average American, let alone not increase their risk in an inevitable crash? Has Heitkamp, complaining about “onerous regulatory burdens,” forgotten all the fraudulent and insanely risky practices that led to the 2008 crash and the 2010 law in the first place? Aren’t onerous regulations of an industry that has proven itself willing to jeopardize the entire world’s financial stability for a few years of inflated returns... a good idea?

It may not be a surprise to see some Democrats jumping on board with a plan to deregulate banks, but it should still inspire rage and dismay that senior lawmakers from the supposed opposition are failing both substantively, by increasing the risk that the country will again have to bail out banks, and politically, by refusing to take popular stands in favor of regulating the industry that wrecked the world economy, and making it more difficult for their colleagues and candidates to seize this issue.

Democrats could run ads against every Republican who votes for this, saying they sold you out to big banks. They could sound something like this statement on the bill, by Sen. Sherrod Brown:

“We missed an opportunity to provide real relief to Americans burdened with student loan debt, homeowners stuck in underwater mortgages or workers who haven’t had a raise in years,” Brown said. “Banks made record profits last year and it looks like executives will get bigger bonuses this year. Hourly wages have stagnated for 40 years, and too many Americans are still feeling the impact of the 2008 financial crisis. Who needs help the most?”


But it will now be much more difficult for Democrats to try that sort of messaging across vast swaths of the nation, because 70 of their own in the House and Senate actually think this bill is good. After all the endless infighting over Hillary Clinton’s Wall Street speeches (which, to be clear, were stupid and shameful), a significant, often dominant segment of the party in Congress is still reaching across the aisle to help the Republican party give huge, tangible policy concessions to the financial industry.

This is happening while banks celebrate their massive gains from the unpopular Republican tax bill—which a majority of voters correctly see as helping the wealthy the most—and while the Consumer Financial Protection Bureau seeks to roll back rules regulating payday loans. The financial industry is both bad for the real economy, and an obvious, deeply unpopular political target. Republicans keep bending over backwards to help them out. Democrats can’t convince normal people they’re on their side as long as so many of them are making it clear which side they’re actually on.


Sen. Warner, one of the bill’s cosponsors, and a friend to the financial industry, said to the Times:

“Were [sic] going to agree to disagree,” said Senator Mark Warner, a Virginia Democrat who sits on the banking committee. “I don’t think this is going to split open the kind of unity you’ve seen in the Democratic Party.”


It probably won’t! But it sure as hell should.

These are the Democratic cosponsors of the Senate bill:



Sen. Bennet, Michael F. [D-CO]



Sen. Carper, Thomas R. [D-DE]



Sen. Coons, Christopher A. [D-DE]



Sen. Donnelly, Joe [D-IN]



Sen. Heitkamp, Heidi [D-ND]



Sen. Kaine, Tim [D-VA]



Sen. Manchin, Joe, III [D-WV]



Sen. McCaskill, Claire [D-MO]



Sen. Peters, Gary C. [D-MI]



Sen. Tester, Jon [D-MT]



Sen. Warner, Mark R. [D-VA]

And here are their offices’ phone numbers.