WASHINGTON (CN) – President Donald Trump signed into law Thursday a measure loosening key restraints for banks that came in the wake of the 2008 financial crisis and Great Recession.
“This is truly a great day for America and a great day for American workers and small businesses all throughout the nation,” President Donald Trump said at a bill signing this afternoon.
The bill, known as the Economic Growth, Regulatory Relief and Consumer Protection Act, cleared the House on Tuesday in a 258-159 vote. Rep. Walter Jones, R-N.C., was the lone Republican holdout on the bill, which otherwise received votes from 33 House Democrats.
In the Senate, the bill passed with a 67-31 vote, despite attempts to derail from Sen. Elizabeth Warren, D-Mass., and others who cast it as a gift to Wall Street.
Under the new legislation, banks with $250 billion in assets will be subjected to stricter liquidity and risk-management requirements. The threshold set in Dodd-Frank, which Congress passed in response to the 2008 financial crisis, was only $50 billion. Another threshold raised by the new bill implicates yearly stress-testing: the old level of $10 billion would rise to $250 billion.
The package would also change the law to let banks with less than $10 billion in assets participate in certain types of trading, and it would loosen capital requirements for banks of the same size. Some smaller banks will also now have lesser reporting requirements for their lending practices.
Republicans supported the bill, saying it will help small, community banks that struggle to keep up with the web of regulation that Dodd-Frank created. The bill’s supporters say the full burden of Dodd-Frank will now fall solely on larger banks, which have the resources to comply with the law and to which the regulations were meant to apply.
“This is a major step forward in freeing our economy from overregulation,” Speaker of the House Paul Ryan, R-Wis., said in a statement Tuesday. “Our smaller banks are engines of growth. By lending to small businesses and offering banking services for consumers, these institutions are and will remain vital for millions of Americans who participate in our economy. By tailoring regulation for these institutions, this bill opens the door to new opportunities for families and small businesses.”
But Democrats have said this argument hides the true intent of the bill, which they say is aimed at loosening regulations for all banks. House Democratic Leader Nancy Pelosi, D-Calif., warned before the vote on Tuesday that the bill will bring the banking industry closer to the state of play that existed before the financial crisis.
“It’s a bad bill under the guise of helping community banks,” Pelosi said on the House floor Tuesday. “It rolls back key safeguards for American consumers. It opens the door to lending discrimination and it potentially threatens the stability of our financial system and our economy.”