Less than a decade after being blamed for fueling the worst financial crisis since the Great Depression, banks are winning again in Washington.

The rebound for the lenders has been so remarkable that Republicans and Democrats in Congress are pushing to scale back financial regulations imposed in the wake of the meltdown — one of the few areas where the two parties agree.


President Donald Trump, who once vowed not to let Wall Street “get away with murder,” has dropped the demonizing campaign rhetoric and recruited industry veterans to his administration. His Treasury Department has drawn up a series of recommendations for trimming the post-crisis rule book. Even the Federal Reserve, the top banking regulator, is working to relax safeguards.

Lawmakers and regulators are rethinking policies including loosening mortgage protections, curtailing so-called stress tests that gauge how banks would fare during economic turmoil, and simplifying capital requirements for smaller lenders. Many of the proposals are targeted rollbacks rather than a wholesale repeal of regulations, but they would have a meaningful impact on the industry.

Behind the shift is the intense focus by the Trump administration and GOP lawmakers on boosting economic growth, a centerpiece of the campaign to enact the massive tax reform legislation. Trump said lightening up on the banks will spur lending and allow businesses to grow, an argument that some analysts question but that the banking lobby has eagerly embraced.

"Banks aren't the winners," American Bankers Association President and CEO Rob Nichols said of the new dynamic. "The winners are the economies, clients, communities and American families buoyed by additional economic growth that can be created through the banking system."

The deregulation drive comes as the U.S. nears the 10-year anniversary of the crisis, when the federal government committed hundreds of billions of dollars to shore up the financial system. Congress then passed the landmark Dodd-Frank law in 2010, the most sweeping rewrite of financial rules in seven decades.

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Sen. Sherrod Brown (D-Ohio), the top Democrat on the Senate Banking Committee, said banking legislation that's moving through Congress showed there is a "collective amnesia" about the crisis.

"People are going to look back, whether it's five years, 10 years or 15 years and say, 'This was the beginning of a massive deregulation scheme,'" Brown said.

Bank lobbyists say the government overreached. "The pendulum swung way too far out of line because of the crisis,” Independent Community Bankers of America President and CEO Cam Fine said. "The agencies became much too harsh and much too closed to banker concerns, and I think you’re going to see the pendulum swing back.”

Republican and Democratic lawmakers are echoing the sentiment that the post-crisis rules need to reflect today’s risks.

Senators from both parties have joined forces to deliver a bill that would streamline mortgage and capital rules for small banks while also relaxing regulatory oversight of several large, regional lenders.

The Senate Banking Committee approved the legislation earlier this month, and it probably has enough support to become law next year.

One of the bill's co -sponsors, Sen. Jon Tester (D-Mont.), said he wasn't surprised that so many Democrats were signing on to the legislation, viewing it as a way to boost smaller banks.

"They see what's going on in their communities and understand that Wall Street was the reason we passed Dodd-Frank and it bled down to community banks” and regional banks, he said.

Tester is among several moderate Democrats pressing ahead with the bill despite warnings from Brown and others in their party that the rollbacks could endanger consumers. At least 11 Senate Democrats are backing the bill, ensuring that it will not be obstructed by a filibuster.

“It's past time," said Tester, one of a number of Democrats up for reelection in red states next November. "It's too bad we didn't get this done four or five years ago. But everything has its moment in time.”

Bankers credit a handful of top officials in the Trump administration for establishing a friendlier tone with the industry.

The list includes White House National Economic Council Director Gary Cohn, the former president of Goldman Sachs, and Treasury Secretary Steven Mnuchin, himself a Goldman alum and a co-founder of California's OneWest Bank.

Staff working for them include Andrew Olmem, who lobbied on behalf of financial institutions before joining Cohn's White House team, and Craig Phillips, who was an executive at asset manager BlackRock before becoming a counselor to Mnuchin at Treasury.

Nichols of the American Bankers Association praised Cohn and Mnuchin for bringing “a thoughtful perspective on banking issues and for demonstrating leadership in the public policy debate."

One Trump administration official who asked not to be named said the debate had shifted thanks to the president's personnel picks at regulatory agencies. The official also cited the momentum of the bipartisan Senate bill and the White House's handling of the Consumer Financial Protection Bureau, where Trump installed his conservative budget chief, Mick Mulvaney, after bureau director Richard Cordray abruptly resigned.

"We've had an onslaught of new regulations, one after another for the last eight years," the official said. "There has not been a thorough review and reflection of how it all fits together."

Trump's choices to head key regulatory agencies are pledging to do their part to make rules more flexible and "tailored" — an effort that has the blessing of some lingering Obama appointees as well.

Federal Reserve officials are rethinking stress tests of banks — a safeguard they enacted after the 2008 meltdown.

“I don’t think what we’re talking about here amounts to deregulation or broad deregulation,” Fed Go vernor Jerome Powell told lawmakers in June, before Trump nominated him to chair the central bank. “It amounts to making regulation more efficient, protecting the important gains that we’ve made. We’re not really talking about some massive program.”

Greg Baer, who represents large banks as president of The Clearing House Association, described the process being undertaken by the Fed as "the thousand tiny Band-Aids approach."

"They’re really trying to find areas where there seem to be some clear policy errors, but not anything terribly dramatic," he said. "That's the smart way to go. It runs against the caricature of the Trump administration wanting to gut Dodd-Frank."

The piecemeal approach has fallen short of what many conservatives, including senior House Republicans, were hoping to see under GOP control of Washington.

Yet because of their narrow majority in Congress, Republicans are limited in how far they can undo Dodd-Frank. There is widespread support among Democrats for key pillars of the law, and even some in the GOP have been uneasy with gutting its consumer protection and financial stability rules.

In October, Senate Republicans had to lean on Vice President Mike Pence to pass a resolution blocking a regulation intended to give consumers a better shot at taking banks and credit card companies to court.

"There’s at least a chance some things get done," said Norbert Michel of T he Heritage Foundation. "There are a lot of good people in the administration and a lot of good people at Treasury who do want to make changes. It’s just unclear how and when some of those really big changes would ever come true.”

Congress and the regulators are “working on the edges of Dodd-Frank” and the core of its framework will remain in place, Keefe, Bruyette & Woods Washington policy analyst Brian Gardner said.

“It's not going away,” he said. “It's really the permanent way of banking regulation for the foreseeable future."