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A decade after the federal government rescued the first of many faltering financial firms, the Senate voted on Wednesday to pass legislation that would relax restrictions on large parts of the banking industry, representing the most significant changes to the rules that were put in place after the 2008 financial crisis, the New York Times reported. In a rare showing of bipartisanship, the Senate voted 67 to 31 to pass the bill, which is intended to help small- and medium-size banks but which critics say is a dangerous rollback of financial regulations intended to prevent another meltdown. The legislation faces an uncertain fate going forward, as House Republicans are expected to push for a much more expansive rollback of the 2010 Dodd-Frank Act. Senate Democrats who voted for the bill that passed yesterday have insisted that major changes along the lines of what the House passed last year will sink the effort but expressed hope that the legislation could herald a return to the kind of cooperation that has recently eluded Congress. The bill, which the Senate Banking Committee drafted over several years, would let hundreds of smaller banks avoid some federal oversight such as stress tests, which measure a bank’s ability to weather an economic downturn.

Sen. Bob Corker (R-Tenn.) has proposed stripping the bipartisan Senate banking bill moving toward passage of a provision critics fear would allow some of Wall Street’s biggest firms to take on more financial risk, the Washington Post reported. Corker, who sits on the Senate’s Banking Committee, filed an amendment yesterday to strike a section of the bill that could weaken one of the capital requirements imposed on banks in the wake of the 2008 financial crisis as a safeguard against another crash. The banking bill cleared a Senate procedural vote last week and is expected to pass as early as this week. At issue is a special capital surcharge imposed by regulators on banks holding more than $250 billion in assets. For every dollar of assets they have on their balance sheet, these banks are required to keep an offsetting percentage in capital. It's not clear if Corker's amendment will be brought up for a vote.

A Senate banking bill that is designed to roll back rules made after the 2008 financial crisis would extend a helping hand to struggling student loan borrowers. On Thursday, Sen. Dick Durbin (D-Ill.) introduced an amendment to the bill that would give people who have taken out private student loans the power to cancel that debt if they file for bankruptcy protection, WSJ Pro Bankruptcy reported. The amount of private student loan debt currently stands at $165 billion, he said. The Democratic Whip’s amendment would eliminate the 2005 rule that made canceling private student loans very difficult, even for borrowers who face extreme financial problems. In a speech on the Senate floor, Sen. Durbin told his colleagues that bankruptcy judges have the power to cancel loans borrowed for homes, boats and other property. Their power, however, stops at student loans, he said. The measure has support from several Senate colleagues, including Jack Reed (D-R.I.), Elizabeth Warren (D-Mass.), Patty Murray (D-Wash.), Sherrod Brown (D-Ohio), Richard Blumenthal (D-Conn.), Tammy Baldwin (D-Wis.), Tammy Duckworth (D-Ill.), Sheldon Whitehouse (D-R.I.), Maggie Hassan (D-N.H.) and Chris Van Hollen (D-Md.).

Seventeen Senate Democrats joined with Republicans yesterday to advance a bipartisan regulatory relief bill for the banking industry, an early sign that the bill can clear the Senate in the coming days, the Washington Examiner reported. The Senate voted 67-32 to end debate on a motion to proceed to the bill, more than the 60 votes needed for that procedural vote. S. 2155 would be the most significant legislative revision to the Dodd-Frank financial reform law since former President Barack Obama signed it in 2010. Nevertheless, it is much more modest than the wholesale replacement of Dodd-Frank sought by President Trump and House Republicans. The most significant provision of the bill is an increase in the size threshold at which banks are subjected to stricter oversight by the Federal Reserve. Today, banks with more than $50 billion in assets face the tougher regulation. The Crapo bill would raise the threshold to $250 billion, providing relief for regional banks like Suntrust and Fifth Third Bank.

The Senate Judiciary Subcommittee on Oversight, Agency Action, Federal Rights and Federal Courts will be holding a hearing today at 2:30 p.m. ET titled "Small Business Bankruptcy: Assessing the System." Robert Keach of Bernstein Shur (Portland, Maine), who is co-chair of the ABI Chapter 11 Reform Commission, will testify on the Commission's Small and Medium-Sized Enterprise (SME) case recommendations. Also set to testify are Prof. Edward Janger of Brooklyn Law School (Brooklyn, N.Y.) and Craig Goldblatt of Wilmer Cutler Pickering Hale And Dorr LLP (Washington, D.C.)For more information about the hearing, please click here. 

To review the Commission's SME recommendations, please click here.

A bipartisan bill that's on the Senate floor this week would increase the odds of government funding going to bail out failed banks, according to a new report from the Congressional Budget Office, the Washington Post reported. The bill, which is scheduled for an initial Senate vote today and is expected to pass the chamber as soon as this week, would roll back some of the regulations Congress put in place after the 2008 financial crisis. A major feature of the bill is exempting about two dozen financial companies with assets between $50 billion and $250 billion from the highest levels of regulatory scrutiny from the Federal Reserve. If passed, it would be the most substantial weakening of the regulations put in place by the 2010 Dodd-Frank law that strengthened financial regulations. The CBO report says those exemptions make it more likely a bank would collapse and lead federal officials to stabilize it with public funds. The CBO notes that this scenario is unlikely in any given year, but it says the bill makes it more probable.

The Senate Judiciary Subcommittee on Oversight, Agency Action, Federal Rights and Federal Courts will be holding a hearing tomorrow at 2:30 p.m. ET titled "Small Business Bankruptcy: Assessing the System." Robert Keach of Bernstein Shur (Portland, Maine), who is co-chair of the ABI Chapter 11 Reform Commission, will testify on the Commission's Small and Medium-Sized Enterprise (SME) case recommendations. Also set to testify are Prof. Edward Janger of Brooklyn Law School (Brooklyn, N.Y.) and Craig Goldblatt of Wilmer Cutler Pickering Hale And Dorr LLP (Washington, D.C.)For more information about the hearing, please click here. 

To review the Commission's SME recommendations, please click here.