WASHINGTON (CN) – Over objections from progressive Democrats who call it a gift to Wall Street, the Senate on Wednesday passed a financial reform bill that loosens the regulatory and reporting requirements of the Dodd-Frank Act – put in place for banks in the wake of the financial crisis.
The bill, known as the Economic Growth, Regulatory Relief and Consumer Protection Act, easily cleared the Senate by a 67-31 vote Wednesday night, despite attempts from Democrats like Sen. Elizabeth Warren, D-Mass., to urge her colleagues to oppose it.
The bill raises the asset threshold at which the Federal Reserve can subject banks to enhanced liquidity and risk-management requirements from $50 billion to $250 billion. In addition, the bill lifts the asset threshold at which banks must undergo yearly stress-testing from $10 billion to $250 billion.
And the bill eliminates a ban on banks with less than $10 billion in assets from being involved in certain types of trading, while also putting in place lesser capital requirements for banks of the same size.
Under the bill, which the House must approve, certain smaller banks will also have looser requirements for reporting their lending practices.
Proponents of the bill, including all Republicans and 16 Democrats in the Senate, say the changes lift regulations that were onerous for smaller banks while keeping in place strict financial regulations on the larger institutions for which the Dodd-Frank Act was designed.
"The cycle of lending and job creation has been stifled by onerous regulation," Sen. Mike Crapo, the Idaho Republican who sponsored the bill, said on the Senate floor before the vote. "Absent excessive regulatory burdens, local banks and credit unions will be able to focus more on lending and in turn propelling economic growth and creating jobs."
But opponents like Warren say loosening regulations will leave Americans vulnerable to predatory lending practices the financial reforms were meant to stop. In a speech on the Senate floor Wednesday, the Massachusetts Democrat warned the Senate bill could leave the economy vulnerable to another financial crisis.
"The American people aren't going to stand by while the big banks and other giant corporations run this economy and this Congress for their own benefit," Warren said in a speech. "And soon – maybe not today, or next week, or even in the next election – but soon, they will demand a government that works for the people."
Sen. Sherrod Brown, the Ohio Democrat who is the ranking member on the Senate Budget Committee, likewise condemned the vote in a statement on Wednesday, calling it a give-away to big banks.
"This body once again sided with special interests and Wall Street instead of homeowners, students and working families," Brown said in a statement. "We missed an opportunity to pass meaningful bipartisan legislation that would help community banks and provide real protections for consumers."
An analysis from the Congressional Budget Office said the risk of a major financial institution failing would be "slightly greater" if the Senate bill became law than under Dodd-Frank.
The White House praised the Senate's vote and urged the House to pass the bill, though it has faced some opposition from House conservatives.
"The bill provides much-needed relief from the Dodd-Frank Act for thousands of community banks and credit unions and will spur lending and economic growth without creating risks to the financial system," Press Secretary Sarah Huckabee Sanders said in a statement. "By tailoring regulation, the bill seeks to prevent excessive regulation from undermining the viability of local and regional banks and their ability to serve their communities."
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.