House passes legislation to roll back banking rules

The House on Thursday voted to free Wall Street from many of the strict constraints put in place after the 2008 financial crisis, the opening salvo in what is likely to be a protracted battle over deregulation of the powerful banking industry.

Big banks, from Goldman Sachs to Bank of America, would face less scrutiny and other large financial institutions, such as insurance giant MetLife, could escape tougher rules all together under the legislation approved along party lines.

The Trump administration backed the bill as part of a multi-pronged effort to ease banking regulations in order to spur economic growth. The legislation is likely to face stiff resistance in the Senate but it provides a roadmap of sorts for the policies the president plans to put in place as he appoints new regulators. Trump, who has complained about tight lending practices, has ordered three reviews of banking rules, the first of which Treasury Secretary Steven Mnuchin is set to deliver as soon as next week.

Democrats and progressive groups, who argue banks need more oversight, not less, are preparing to use the issue to animate supporters still angry that Wall Street banks have not paid a bigger price for the financial crisis. Many have expressed particular concern over a provision that would curtail the powers of the Consumer Financial Protection Bureau, and reduce its independence by having its director report to the president.

The bill, introduced by Rep. Jeb Hensarling, R-Texas, offers the country’s nearly 6,000 banks a choice: If they want to avoid many of the regulatory burdens imposed during the Obama administration, they must significantly increase their emergency financial cushion. That way, even if they run into financial trouble, the banks should have enough money to survive without taxpayers’ help, supporters of the bill say.

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