Wall Street banks don’t have much to celebrate in what’s probably the final version of a bill easing financial rules that is headed for a U.S. Senate vote.
Late Wednesday, Senate Banking Chairman Mike Crapo, an Idaho Republican, proposed some last-minute changes to his overhaul of the Dodd-Frank Act. He specified that foreign banks such as Deutsche Bank AG and Barclays Plc won’t benefit from a reprieve in his legislation that’s intended to help regional U.S. lenders.
Crapo’s revisions -- filed in an amendment -- also make clear that only custody banks, including State Street Corp. and Bank of New York Mellon Corp., will win relief from a key post-crisis capital requirement. Citigroup Inc. and other lenders had been pushing lawmakers to expand a provision in the bill so they would also get a break.
And Crapo declined to make changes to the Volcker Rule that firms such as Goldman Sachs Group Inc. had been pressing for.
Another recipient of bad news is Equifax Inc., the credit company whose 2017 hack put millions of consumers at risk of identity theft. Crapo’s amendment would require it and competitors to provide free credit monitoring to some consumers after a breach.
But Equifax and its competitors could benefit from a separate section Crapo added to his bill. The provision affects Fair Isaac Corp., the creator the FICO credit score that is crucial to consumers getting a mortgage. Crapo’s revision would direct mortgage-finance giants Fannie Mae and Freddie Mac to use credit scores offered by other companies, instead of exclusively relying on FICO assessments. Equifax and other credit-reporting companies own VantageScore Solutions LLC, a potential rival to Fair Isaac.
Massive Overhaul
The bill broadly marks the biggest overhaul of Dodd-Frank since it became law eight years ago. Crapo’s legislation is largely aimed at giving small and regional banks a reprieve from regulations put in place after the 2008 financial crisis, including raising the threshold for banks subject to aggressive oversight because they’re considered “too-big-to-fail.” To-be-sure, it does include some goodies for Wall Street.
The legislation’s backers -- including at least a dozen Senate Democrats -- say smaller firms didn’t cause the meltdown and that burdensome rules are preventing them from making loans that would spur economic growth. But progressives, including Massachusetts Democrat Elizabeth Warren, have repeatedly framed the bill as an assault on consumers that will undermine crucial reforms.
The Senate is expected to vote on Crapo’s bill as soon as this week, with lawmakers beginning the process of considering amendments Thursday. While dozens of amendments have already been offered, Crapo’s proposed revisions are by far the most important. His legislation is a compromise, not rolling rules back as much as the finance industry would like and doing little to help Wall Street.