The U.S. House has introduced—and even passed—several bills during the past few years aimed at reforming financial regulations, but the Senate has lagged far behind. So it is a positive sign that Senate Banking Committee Chairman Richard Shelby (R–AL) introduced the Financial Regulatory Improvement Act of 2015. The Committee approved the bill today, 12-10, along party lines.
Before the draft was even released, however, several Democrats criticized Shelby for undertaking a partisan effort and shutting fellow Democratic committee members out of the process. After the 200-page draft was released, Democrats unveiled their own 20-page proposal and the top Democrat on the Committee, Sherrod Brown (D–OH), opposed the bill.
Senator Brown called the proposal “a sprawling industry wish list of Dodd-Frank rollbacks” and said that the proposal “holds Main Street financial institutions hostage to a partisan effort to dismantle Dodd-Frank’s consumer protections.”
This whole process is far from over, but it already serves as a lesson in how bipartisan politics work in Washington: Republicans make an honest effort to collaborate with Democrats, and in return, they are accused of playing partisan politics.
The truth is that Shelby’s bill wouldn’t dismantle anything, and most of what’s in it has already garnered bipartisan support (in many cases, overwhelmingly so). Here are just a few items from Shelby’s draft that match existing bipartisan legislation very closely.
- Title 1, Section 101. Based largely on Representative Blaine Luetkemeyer’s (R–MO) Eliminate Privacy Notice Confusion Act (H.R. 601). This bill passed the House in 2015 by a virtually unanimous voice vote, as it did during the previous Congress in 2013.
- Title I, Section 103. Based largely on Representative Andy Barr’s (R–KY) Helping Expand Lending Practices in Rural Communities Act (H.R. 1259). This Act that passed the House in April 2015 by a vote of 401 to 1, and virtually the same bill passed the House by near unanimous voice votein the previous Congress. In 2014, a companion bill was introduced in the Senate but was never acted on.
- Title I, Section 108. Very similar to the Preserving Access to Manufactured Housing Act of 2015 ( 682), introduced by Senator Joe Donnelly (D–IN), and co-sponsored by Senators Pat Toomey (R–PA), Joe Manchin (D–WV), and Tom Cotton (R–AR). The companion bill in the House, H.R. 650, passed by a vote of 263–162 in April 2015. The House version had four Democratic co-sponsors, but none of this bipartisanship prevented the White House from issuing a veto threat.
- Title I, Section 117. Representative Steve Pearce (R–NM) and Representative Brad Sherman (D–CA) introduced R. 2213, a bill that would provide lenders with a temporary safe harbor (until January 1, 2016) from enforcing a rule that conflicts with many state laws. The rule is the Truth In Lending Act-Real Estate Settlement Procedures Act (TILA-RESPA) integrated disclosure rule, set to take effect on August 1, 2015.
- Title III. This Title is aimed at improving the transparency of the nonbank systemically important financial institution (SIFI) designation process, and it is based largely on the Financial Stability Oversight Council Improvement Act (R. 5180). The bill was introduced by Representative Dennis Ross (R–FL), and co-sponsored by Representatives John Delaney (D–MD), Spencer Bachus (R–AL), Kyrsten Sinema (D–AZ), Patrick Murphy (D–FL), and Blaine Luetkemeyer (R–MO).
- Title IV, Section 402. Virtually identical to the Policyholder Protection Act of 2015 (798), introduced by Senator David Vitter (R–LA) and cosponsored by Senator Jon Tester (D–MT).
- Title IV, Section 403. Virtually identical to the International Insurance Capital Standards Accountability Act of 2015 ( 1086), introduced by Senator Dean Heller (R–NV) and co-sponsored by Senator Jon Tester (D–MT).
- Title V, Section 502. Based largely on the Fed Accountability Act of 2015 ( 1248), introduced by Senator Elizabeth Warren (D–MA) and co-sponsored by Senator David Vitter (R–LA).
- Title VI, Section 601. Virtually identical to the Holding Company Registration Threshold Equalization Act of 2014 (R. 801), a bill that passed the House by a vote of 417–4.
- Title VI, Section 602. Based largely on the Promoting Job Creation and Reducing Small Business Burdens Act (R. 5405), a bill that the House passed 320–102 in September 2014. The section is also similar to H.R. 1675, a bill introduced in March 2015 by Representative Randy Hultgren (R–IL) with four Democratic co-sponsors.
- Title VI, Section 603. Based largely on the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2013 (R. 742). The House passed this bill in June 2013 by a vote of 420 to 2.
- Title VI, Section 604. Virtually identical to the Improving Access to Capital for Emerging Growth Companies Act (R. 1659). The bill was introduced by Representative Stephen Lee Fincher (R–TN) and co-sponsored by Representative John Delaney (D–MD).
There’s no doubt there are some provisions in the draft that are contentious, such as reforms aimed at Fannie Mae and Freddie Mac and changing the SIFI designation process so that only the very largest firms might be designated for heightened regulation. But even these proposals have garnered some bipartisan support.
In fact, even Federal Reserve Governor Daniel Tarullo has already supported moving up the SIFI threshold.
Regardless of where Shelby’s proposal ends up, there is no doubt that the Senator and his staff made every effort to craft bipartisan legislation. If the Democrats continue to attack this process as partisan, it says a great deal about what they really want.
