House Republicans voted Thursday to eviscerate much of the Dodd-Frank financial-regulations law, moving to wipe out one of President Obama’s signature accomplishments enacted to crack down on Wall Street in the wake of the 2008 crisis.
GOP leaders said the 2010 law backfired, imposing too many burdens on community banks while encouraging even greater market concentration in the big banks that Democrats blamed for the financial crash. Republicans also said the law didn’t do enough to prevent another market crash.
“This law may have had good intentions, but its consequences have been dire for Main Street,” said House Speaker Paul D. Ryan.
The 233-186 vote fell essentially along party lines, with Democrats complaining that the GOP was pandering to major corporate donors.
The bill now heads to the Senate, where it is likely to face a Democratic filibuster, given the overwhelming Democratic opposition in the House.
“This is one of the worst bills I have seen in my time in Congress,” said Rep. Maxine Waters of California, ranking Democrat on the House Financial Services Committee. “This bill is a vehicle for Donald Trump’s agenda to deregulate and help out Wall Street.”
Along with Obamacare, Democrats tout Dodd-Frank — the bill’s shorthand named after its leading authors — as one of their signature legislative accomplishments when Mr. Obama had a Democratic-controlled House and Senate for the first two years of his presidency.
But the Thursday vote is another indication that much of that legacy could soon be wiped out by the Republican-controlled political branches.
Rep. Jeb Hensarling, Texas Republican and chairman of the House Financial Services Committee, said Dodd-Frank ended up being a series of broken promises.
“The big banks are bigger. The small banks are fewer,” he said. “We’re losing a community bank or credit union a day.”
The new bill allows banks that maintain certain levels of capital to opt out of other regulations, and nixes a provision, known as the Volcker rule, which curbs banks’ ability to use funds to engage in speculative trading.
The bill also repeals a provision in Dodd-Frank that calls on the Federal Deposit Insurance Corporation and the Federal Reserve to issue recommendations when it comes to seizing and winding down major failing firms.
The legislation would instead set up a new bankruptcy process, with the goal of minimizing the risk of a taxpayer-funded bailout for “too big to fail” banks.
The legislation also reduces the power of the Consumer Financial Protection Bureau (CFPB), an independent agency set up under Dodd-Frank that has become ensnared in litigation over its scope and authority.
Republicans have been particularly outspoken in opposing the CFPB, saying too much power to pursue legal action against bad actors is vested in unelected officials, notably the bureau’s director, Richard Cordray.
The GOP bill allows the president to fire the CFPB director for any reason — an issue that’s currently the subject of litigation before the federal appeals court in Washington, D.C.