House Republicans, with Some Democratic Support, Make Latest Attempt to Roll Back Financial Regulations

Although Speaker Paul Ryan (WI-01) will be retiring next year, he got to enjoy one of his favorite parts of the job yesterday: voting to deregulate the financial industry.

The House passed two bills, both of which received some Democratic support.

The first bill — the Financial Stability Oversight Council Improvement Act — would make it even more difficult for federal regulators to designate non-bank financial institutions as systemically important financial institutions (SIFIs), which are subject to heightened supervision due to their systemic risk.

According to Americans for Financial Reform, the new steps mandated under the bill would at least double the time required for designation of a large non-bank entity and could permit large financial firms that are skilled at manipulating the process to delay increased regulatory oversight almost indefinitely.

The bill passed 297 to 121. 66 Democrats joined Republicans in voting for it, and 1 Republican — Walter Jones (NC-03) — joined Democrats in voting against it.

Here are the 66:

The second bill — the Stress Test Improvement Act of 2017 — would not, of course, improve stress tests. The bill would weaken them.

In particular, this bill would create new obstacles for Dodd-Frank’s bank stress tests and the Federal Reserve’s Comprehensive Capital Analysis and Review (CCAR). It would also require regulators to release in advance for public comment the exact models and assumptions used to test bank portfolios and predict losses.

Americans for Financial Reform condemned the bill, explaining, “[T]his would permit big banks to game the system by rigging their portfolios to match the models. Like showing a test to students in advance, this would permit big banks to game the system by rigging their portfolios to match the models. Releasing these details under a notice and comment process would also permit big banks to sue in court to challenge any detail of the regulatory oversight model that was used, slowing the stress testing process to a crawl and subjecting regulatory experts to judicial veto.” 
 
 The bill passed 245 to 174. 13 Democrats joined Republicans in voting for it, and 1 Republican — Walter Jones (NC-03) — voted against it.

Here are the 13 Democrats: Joyce Beatty (OH-03), Emanuel Cleaver (MO-05), Steve Cohen (TN-09), Lou Correa (CA-46), Jim Costa (CA-16), Henry Cuellar (TX-28), Josh Gottheimer (NJ-05), Stephanie Murphy (FL-07), Tom O’Halleran (AZ-01), Collin Peterson (MN-07), David Scott (GA-13), Kyrsten Sinema (AZ-09), and Tom Suozzi (NY-03).