Last week, the U.S. Senate passed a bill known as the “Economic Growth, Regulatory Relief, and Consumer Protection Act,” which aims to eliminate many regulations in the financial industry. The bill was passed with bi-partisan support and specifically aims to roll back many of the regulations imposed under the Dodd Frank Act, a law passed to tighten banking practices following the Great Recession.
At the core of this new bill is the Senate’s goal of making lending easier for many smaller banks and credit unions. Under current law, smaller banks and credit unions are required to comply with arduous lending and reporting requirements. The largest banks, or those that pose “systemic risk,” will be required to maintain these requirements.
Senators who passed the bill believe that it could lead to increased borrowing, a boon to both smaller banks and U.S. homebuyers. Fewer regulations mean more lending. But opponents of the bill point out that fewer regulations bring the increased risk of a major financial collapse, as the U.S. economy witnessed almost a decade ago.
Both supporters and detractors of the bill will continue to debate its merits now that it is headed to the House. If it passes the House, the bill will then head to President Trump, who has repeatedly stated his interest in eliminating banking regulations that he sees as harmful to economic growth.