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The legal process for winding down a failing bank under federal control is in jeopardy, as some Senate Republicans are looking to use a workaround to chip away at pieces of the Dodd-Frank Act without needing a 60-vote majority, BloombergBNA reported yesterday. The lawmakers are targeting the “orderly liquidation fund,” which is designed to bankroll the Federal Deposit Insurance Corp. as it liquidates a failing institution. Slashing that fund would crimp the FDIC’s ability to carry out its Dodd-Frank powers. Sen. Pat Toomey (R-Pa.) is spearheading the effort, and Republican staff members are combing through the law to find other sections that could be eligible for changes through reconciliation. Republicans will have a 52-seat majority in 2017, but incoming Senate Minority Leader Chuck Schumer (D-N.Y.) has vowed to protect Dodd-Frank from GOP repeal efforts. Senate rules, however, require only a simple majority under the reconciliation process, which permits faster congressional action on tax and spending matters. 

Some Republican senators are looking to put financial deregulation on the fast track next year by using a special legislative procedure to help them dismantle parts of Dodd-Frank, the Wall Street Journal reported today. They are exploring use of a tactic known as reconciliation, a procedural shortcut tied to the budget, which would allow them to make legislative changes to the 2010 regulatory-overhaul law with just a simple majority in the Senate. Republicans are likely to hold 52 seats in the 100-seat chamber, meaning they could pass such changes with just GOP votes. They would otherwise need 60 votes to get the legislation through the Senate, putting them in the difficult position of needing support from some Democrats, who generally oppose rolling back the landmark law. Sen. Pat Toomey (R-Pa.) is leading the charge to use reconciliation to pare back pieces of the law, which President-elect Donald Trump has repeatedly said that he wanted to scale back or scrap.

House Republicans are retooling their Dodd-Frank overhaul legislation to increase its odds of being enacted, a key House lawmaker said in an interview. The changes are aimed at pacifying enough moderates to avoid trouble in the Senate and averting strife with the incoming administration, MorningConsult.com reported yesterday. Rep. Bill Huizenga (R-Mich.), a senior member of the House Financial Services Committee, said that Republicans are holding internal discussions over changes to the Financial CHOICE Act, a measure sponsored by Committee Chairman Jeb Hensarling (R-Texas). During the presidential campaign, Trump pledged to repeal Dodd-Frank. Many of his financial regulation proposals echo parts of the CHOICE Act, but Trump never publicly embraced Hensarling’s bill. In the Senate, Banking Committee Chairman Richard Shelby (R-Ala.) has been cool to the measure. But he is stepping down from the post and replaced by Sen. Mike Crapo (R-Idaho), who has yet to outline his own plans for the panel.

The House is poised to vote this week on a measure that would revise the designation process for “systemically important” bank holding companies under the Dodd-Frank financial law, MorningConsult.com reported yesterday. H.R. 6392, sponsored by Rep. Blaine Luetkemeyer (R-Mo.), chairman of the House Financial Services Subcommittee on Housing and Insurance, would base the systemically important designation on factors other than just asset size, which is currently the sole criterion. The House Rules Committee is scheduled to consider the measure tonight, signaling a floor vote as early as tomorrow. It is not clear whether the Senate will take up the legislation, if the House passes it, before the 114th Congress adjourns. House passage would represent one bipartisan prong of the GOP’s attempted Dodd-Frank rollbacks. The proposed standards in Luetkemeyer’s bill — size, interconnectedness, “extent of readily available substitutes or financial institution infrastructure,” global activity and complexity — are based on criteria established by the Basel Committee on Banking Supervision. Republicans have called the measure a nuanced antidote to what they see as Dodd-Frank’s overly broad approach.

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said that he is ready to help President-elect Donald Trump “in any capacity possible,” The Hill reported today. Hensarling yesterday met with Trump privately at Trump Tower in New York amid talk that he is under consideration to serve as Treasury secretary. In brief remarks to reporters after the meeting, Hensarling did not address that position specifically but painted himself as a true Trump team player. “I stand ready to help the President in any capacity possible,” he said. “I’ve got a great position in public policy today, if he wants to talk to me obviously, about serving somewhere else, we’ll look at serving somewhere else.” Hensarling is the architect of a broad bill that would drastically change and repeal portions of the Dodd-Frank financial reform law, and many believe that if he stays in Congress, it could serve as a blueprint for GOP policymaking going forward. Hensarling said that he did discuss Dodd-Frank with Trump, among other issues.

The U.S. Congress could as soon as January start to dismantle President Barack Obama's transformation of student loan rules by blocking freshly minted regulations designed to help students who say they were defrauded by for-profit colleges, Reuters reported yesterday. The new measures, which lay out loan relief procedures for the students, were issued by the Department of Education just days before the election. That is recent enough to allow the new Republican-led Congress to disapprove them under a 1996 law called the Congressional Review Act. It gives Congress 60 legislative days to reverse regulations with a simple vote. Republicans opposed the rule when it was proposed. Lamar Alexander (R-Tenn.), who chairs the Senate committee on education, is considering introducing a resolution that would overturn the so-called "Borrower Defense" rule, according to a spokeswoman. Even without a legislative reversal, president-elect Donald Trump, who ran on an anti-regulation platform and started his own for-profit school, could instruct agencies to be more restrictive in how they interpret this rule and others aimed at easing student loan burdens. Read more.

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