Regulatory Reform Under S. 2155
by Ryan Gilliland, Government Relations Officer

Since the passage of Dodd-Frank in 2010, Republicans have promised, and the financial services industry has sought a total regulatory overhaul. A significant step in pursuit of that goal was achieved earlier this month, with Senate passage of S. 2155. 

Broadly, the bill is being hailed as a significant step in relaxing the regulatory burden on the financial industry. Practically, that’s true; the bill provides useful relief in the treatment of lenders under $10 billion in assets, particularly in the mortgage sector. However, a 60-vote Senate threshold required for passage ensures Senate Democrats strongly influence the impact of the new law.

As a result, what’s under consideration now in the House is a carefully negotiated compromise between sympathetic Democrats and reform-minded Republicans. Notably, the father of the CFPB, Barney Frank perhaps sums it up best himself, “The Senate bill makes a couple of changes I don’t like, but 95% of...Dodd-Frank is unchanged.” 

Capitol Hill Republicans are quick to note incremental victory has value. It proves Dodd-Frank is a “living document” not etched in stone. While that’s true, and the relief here is real, perhaps Democrats have carved out an artful win as well—voting for common-sense limited reform, and in turn, relieving some level of pressure on the issue without sacrificing significant ground. House Republicans must now determine how far to push that compromise as they amend the Senate package. Changes will ultimately require Senate approval, so the negotiation could run for months unless proponents convince House leaders to settle for what’s already included.

Alternatively, regulatory reform from an administrative perspective has been swift. Mick Mulvaney’s November appointment to replace CFPB Director Richard Cordray triggered a 210-day limit for him to remain as interim director before the Senate confirms a permanent successor. His race to reverse course for the agency will likely continue at this pace, and the Trump administration promises sweeping action through agencies or executive actions.

This underscores one of the lasting legacies of the Obama administration, which now confronts Republicans with an uncomfortable proposition. To sidestep Congressional gridlock, agencies like the CFPB were structured with single directors and budgets controlled outside the reach of Congress. This grants regulators true independence to implement vast and sweeping changes. Republicans could now reverse those decisions and re-structure agencies. However, as they finally enjoy the advantage of full regulatory control, that kind of restraint is a big pill to swallow.  

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