An opening gambit by Senate Banking Committee Chairman Richard Shelby (R-Ala.) to ease regulatory restrictions on smaller banks and increase scrutiny of the Federal Reserve was met with skepticism by Democrats, portending a rough road for a bill that would make the most significant changes to financial regulation since the 2010 Dodd-Frank law, the Wall Street Journal reported today. While elements of the draft legislation unveiled yesterday are supported by both parties, congressional Democrats and the Obama administration criticized the bill as an overreach that could roll back some of the fundamental protections implemented after the 2008 financial crisis. “Rather than focusing on issues that enjoy broad bipartisan support, this draft bill is a sprawling industry wish list of Dodd-Frank rollbacks,” said Sen. Sherrod Brown (D-Ohio), the committee’s top Democrat. Among the flash points, say Democratic aides, are provisions easing federal mortgage-underwriting standards and changing the process for declaring which large financial firms ought to be subject to stricter Fed oversight. Other pieces of the bill, such as a section requiring the Fed to report more to Congress regarding what goes into their interest-rate decisions, could spark opposition from moderate Democrats who worry about lawmakers meddling in monetary policy. The bill is currently scheduled to be marked up at a Senate Banking Committee hearing next Thursday, May 21.
