This Affects YOU: Congress Rolls Back Consumer Banking Protections

Why in the world would they do this? This week, Congress passed a bill that rolls back regulations
adopted after the 2008 financial crisis, weakening consumer protection and “slightly” increasing the risk of another banking collapse. Basically, it allows banks to do the risky lending behavior that brought the U.S. economy to its knees a decade ago (when the housing market crashed).

Here's the story: Congress approves plan to roll back post-financial-crisis rules for banks

By Erica Werner and Renae Merle, May 22 , Washington Post

The House on Tuesday passed a plan to roll back banking regulations passed in response to the 2008 financial crisis, sending the bill to President Trump to sign.

WHAT IT MEANS:    The measure leaves the central structure of the post-financial-crisis rules in place, but it would make the most significant changes to weaken the Dodd-Frank banking regulations since they were passed in 2010. It would exempt some small and regional banks from the most stringent regulations, and also would also loosen rules aimed at protecting the biggest banks from sudden collapse.    (So it puts consumer savings MORE at Risk) . 

The measure is nearly certain to become law after its passing in the House, 258 to 159, on Tuesday with nearly all House Republicans and 33 Democrats voting for it. The Senate approved the bill in March with bipartisan backing, and White House officials said that Trump plans to sign it in the coming days.

The bill’s supporters say it provides needed relief for community and local banks withering under Washington’s regulations. But critics charge it opens the financial system back up to the abuse and risky behavior that brought the U.S. economy to its knees a decade ago — and does so at a time when financial firms are posting record profits.

WHAT IT DOES: Under the bill, banks with more than $50 billion in assets would no longer be automatically subject to the toughest federal regulations, including a yearly stress test to prove they could survive another onslaught of economic turmoil. The bill would raise that threshold to $250 billion in assets, potentially allowing several high-profile financial institutions, including American Express and Ally Financial, to escape the extra regulatory scrutiny.

The legislation would also exempt banks with less than $10 billion in assets from the “Volcker rule,” which bars banks from making certain risky wagers with their own money. Small banks will also be exempted from a Dodd-Frank requirement that they report more detailed data on borrowers. The industry has complained that both regulations are too cumbersome and time-consuming.