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As an important deadline looms in Congress, the Obama administration signaled yesterday that it would push back hard against any legislation that substantially weakens the sweeping 2010 overhaul of the financial system, the New York Times reported today. Republicans in Congress are backing legislation that would soften certain parts of the reforms, which were accomplished through the Dodd-Frank Act five years ago. They are now seeking to insert the changes into a spending bill that has to be passed by Dec. 11 to avoid a government shutdown. Last year, Congress attached a provision to a wider spending bill that ended up gutting an important part of the law regulating instruments known as swaps. The victory for Wall Street indicated that big banks still had sway in Washington, but it also helped reinvigorate the campaigns of those who want to do more to rein in large financial institutions. Jacob J. Lew, the secretary of the Treasury, yesterday sought to underscore the administration’s opposition to any meaningful concessions on Dodd-Frank. “I have publicly made clear that my recommendation to the president would be that if there are legislative measures that will roll back the clock, that would take us back toward where we were before the financial crisis, I would recommend a veto,” Lew said.

Two senators have introduced a bill aimed at preserving the rights of military service members to go to court, the New York Times reported on Saturday. The measure would allow service members to opt out of arbitration and challenge repossessions or foreclosures with a lawsuit. “Often service members sign contracts that include arbitration clauses buried in the fine print, and this eliminates their access to the courts, which can limit their ability to assert their rights and reach a fair resolution,” said one of the bill’s sponsors, Sen. Jack Reed (D-R.I.). Reed and Sen. Lindsey Graham (R-S.C.) introduced the bill on Thursday. The bill faces an uphill battle: A similar measure never made it out of committee last year after lobbying by the U.S. Chamber of Commerce and Wall Street’s major trade group, the Securities Industry and Financial Markets Association, according to federal records. Read more. 

Read more about financial protections for U.S. servicemembers with ABI’s Bankruptcy and Debt under the Servicemembers Civil Relief Act. 

A bill that would limit the U.S. Consumer Financial Protection Bureau’s 2013 auto lending guidance passed the House of Representatives late Wednesday by a 332-96 vote, Automotive News reported today. H.R. 1737 — the Reforming CFPB Indirect Auto Financing Guidance Act — would revoke 2013 auto lending guidance from the CFPB. The guidance suggests lenders should either impose limits on or eliminate dealerships’ ability to adjust, on a case-by-case basis, the amount of compensation they keep for arranging a consumer auto loan, a discretionary practice that the CFPB says can lead to discriminatory loan pricing. The bureau oversees lenders but not auto dealers. Eighty-eight Democrats joined 244 Republicans in voting for the bill. Republicans were unanimous in support of the bill, while Democrats comprised all 96 of the “nay” votes. The bill still faces several hurdles before it could become law. Industry insiders told Automotive News earlier this year that the bill faces an uphill climb in the U.S. Senate. Even if it does pass, it could face a veto from President Barack Obama, who opposes the bill. In that case, a two-thirds majority in both houses would be required to override the president’s veto.

As Congress scrambles to wrap up its budget for this year, banks and their political allies are again angling to insert unrelated rule-reduction measures — and bracing for a new battle, the Wall Street Journal reported today. The two most significant changes under consideration this year: easing supervision requirements for banks with about $50 billion in assets; and changing the process for subjecting BlackRock Inc. and other big financial firms to bank-like regulation. In a Senate speech last Tuesday, Sen. Elizabeth Warren (D-Mass.) warned that she wouldn’t let the proposals through “without a fight.” Among the most consequential of dozens of policy changes that could be attached to a December funding deal: exempting some big U.S. banks from annual “stress tests” and revamping the process by which regulators single out risky financial firms as “systemically important,” and thus subject to extra supervision.

As more consumers and small-business owners skip the bank and turn instead to online lenders for loans, policymakers in Washington, D.C., are looking more closely at the operations to determine whether they should be more tightly regulated, the New York Times reported today. While it is widely acknowledged that the lenders provide a vital service by making business financing faster and easier to obtain, elected officials and some experts in the field have expressed concern about the opaque terms and high interest rates on some loans. Because the online lenders operate outside the traditional system, they face fewer regulatory restrictions than mainstream banks. Lawmakers and government officials have taken a fairly hands-off approach to the industry so far, but those in the industry acknowledge that the scrutiny on them is increasing — and new rules may follow.

Several House Democrats supported incremental changes to the Dodd-Frank financial reform law in committee votes on Tuesday, and in doing so, they put themselves on record as disagreeing, at least in part, with the Obama administration and liberal stalwarts like Sen. Elizabeth Warren (D-Mass.), according to a commentary in today’s Morning Consult. At least one-third of Democrats on the House Financial Services Committee voted in favor of two bills to change how a “systemically important financial institution,” (SIFI) is designated under the law. Such a designation, made by the Financial Stability Oversight Council, or FSOC, subjects banks to more rigorous compliance standards. First, eight Democrats voted to remove a $50 billion asset threshold for designating banks as systemically important. The bill would replace the $50 billion threshold with a flexible designation system that takes into account the size of the bank, its interconnectedness within the financial system, its mix of activities, and other factors in order to determine its systemic importance.