House Republicans voted to gut the Dodd-Frank Wall Street reform law this past summer with legislation called the “Financial Choice Act.” Then, on the heels of a huge giveaway to the rich and corporations with the #GOPTaxScam, the Senate passed its own version of Wall Street de-regulation: the deceivingly-titled “Economic Growth, Regulatory Relief, and Consumer Protection Act” (S. 2155 or the “Bank Lobbyist Act”). The House still has to vote on that version of the bill before it heads to Trump’s desk for signature: tell them to vote no.
This bill puts us at risk of another financial crisis
The Wall Street reform law requires that the country’s largest banks be subject to responsible oversight, to safeguard against another crisis that the collapse of a large bank could cause. Current law requires any bank larger than $50 billion—the 38 biggest banks in the country—be subject to certain standards. But this bill would quintuple that threshold to $250 billion. That means two dozen of the country’s largest banks—that together received $47 billion in TARP “bailout” funds—would escape the oversight intended to prevent another financial crisis. These are banks as big as the toxic subprime lender Countrywide. It also means that banks that are currently failing government “stress tests”—periodic checks to ensure that they won't blow up the economy—would no longer have to undergo the current tests.
It allows racial discrimination in mortgage lending to go unchecked
Currently, the Home Mortgage Disclosure Act (HMDA, pronounced HUM-da) requires most banks to collect demographic information when they originate mortgages. Collection of this data helps track patterns of application, denials, and volume along lines of race to ensure that discrimination in lending doesn’t continue to fuel broader, systemic racial inequality. This bill would exempt the vast majority of mortgage lenders from new data collection requirements passed after the subprime crash—leading to an information vacuum that will hurt communities of color.
It erodes critical consumer protections
A number of key consumer protections put in place by Dodd-Frank to protect everyday homebuyers against the predatory behavior of banks are repealed or eroded by this bill. Guaranteed protection from surprise insurance fees and taxes that have been shown to reduce foreclosures are eliminated. Makers of manufactured homes are exempted from truth in lending requirements, putting rural and low-income homebuyers at risk of predatory lending. Rural homebuyers are particularly at risk from a new provision that could lead to homes being overvalued at the time of purchase, putting them at greater risk of owing more on their mortgage than the value of their home. And it allows lenders to surprise buyers with new predatory loan terms at the time of closing, without adequate time for review. These changes and more tilt the playing field back in favor of the big banks and put consumers at risk.
...All of this in the name of “helping community banks”
Proponents of this bill—Democrats included—say this bill is about helping the community banks and credit unions in their state. But this legislation goes far beyond that. In fact, it was flawed from the start: Senate Republicans began by copying and pasting more than a dozen sections from the CHOICE Act. While the rest of it isn’t as radically extreme, it is still a terrible bill that favors banks over people and allows the same risk in our financial system that the Wall Street reform law eliminated—risk that caused the financial crisis.
If Senators wanted to pass a community banking bill, they could pass a community banking bill. This is not it. In fact, prominent beneficiaries of this bill are international banks like Deutsche Bank, Barclays, and Santander—hardly your community bank on the corner. Community banks have legitimate concerns that should be addressed but this legislation goes far beyond that—far enough that your Senator should oppose it.
Call Your MoC
Caller: Hello! My name is [ ] and I’m calling from [part of state]. I’m calling about bill S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act.
Staffer: Thank you for calling. The House may vote on that bill soon.
Caller: Yes, and I want the Congressman to oppose this bill. The CBO says it will put us at greater risk of more taxpayer-funded bank bailouts. And it will allow racial discrimination in mortgage lending to go unchecked.
Staffer: This bill is about helping community banks. The Congressman thinks Main Street needs relief from burdensome government regulations.
Caller: This bill isn’t focused on helping community banks. It de-regulates 25 of the biggest 38 banks -- even foreign banks.
Staffer: I’ll let the Congressman know your thoughts.
Caller: Thank you. Please take down my contact information so you can let me know what the Congressman decides to do.