Banking deregulation legislation advanced Tuesday by the U.S. Senate contains two provisions offered by Sen. Joe Donnelly, D-Ind.
One proposal aims to protect the credit ratings of military veterans, and the other would ease access to financing for manufactured housing.
The Senate voted 67-32 in favor of limiting debate on the Economic Growth, Regulatory Relief and Consumer Protection Act, which would relax some regulations Congress imposed on banks in 2010 in the wake of the nation's financial crisis.
Donnelly was among 16 Democrats and an independent who joined with 50 Republicans to advance the measure on a procedural motion requiring 60 votes to pass. Thirty-one Democrats and an independent opposed the motion. The Senate is expected to take a final vote this week or next.
Donnelly and other proponents of the legislation said it would reduce regulatory burdens placed on smaller banks by the Dodd-Frank law while protecting consumers and retaining safeguards against risky loans and investments by larger financial institutions.
“This bill is carefully written and narrowly tailored,” Donnelly said during a floor speech broadcast by C-SPAN. “This commonsense legislation is intended to help Main Street community banks and local credit unions to focus more on traditional banking, our small businesses, our farms, our families, while maintaining the safety and soundness of our financial system.”
Opponents argued that looser rules could lead to a repeat of the 2008 financial crisis that resulted in a severe economic recession.
Sen. Sherrod Brown, D-Ohio, said in a floor speech that bill supporters “are all suffering from collective amnesia. They just forgot what happened 10 years ago.” Brown also said, “It's hubris to think we can gut the rules on these banks again but avoid the next crisis.”
Highlights of the bill include exempting banks with less than $10 billion in assets from the so-called Volcker Rule, which prohibits them from proprietary trading and making certain investments; and raising from $50 billion to $250 billion the assets threshold for banks that receive the closest regulatory scrutiny, such as yearly “stress tests.”
With roughly $15 billion in assets, Evansville-based Old National Bank is the biggest bank headquartered in Indiana and was the only Hoosier bank with more than $10 billion in assets in the third quarter of last year, according to iBanknet, which tracks financial institutions.
The Indiana Chamber of Commerce praised Donnelly for backing the bank deregulation bill.
“The Indiana Chamber is pleased to see Sen. Donnelly help lead the way to remove excessive regulations for banks and credit unions, as well as make access to funds easier for Hoosiers looking to buy a home or small businesses needing that infusion of capital,” Indiana Chamber President and CEO Kevin Brinegar said in a statement.
Donnelly, who is up for re-election this year in a largely Republican state, was among 11 Democratic senators, 12 Republicans and an independent who co-sponsored the bill. He also is a member of the Senate Banking Committee, which passed the legislation in December.
The legislation contains a provision that originated as Donnelly's Protecting Veterans Credit Act, which would prohibit for a year the release of medical debt information for Department of Veterans Affairs patients to credit reporting agencies.
“It ensures veterans are not wrongly penalized when the Department of Veterans Affairs is late in paying a vet's medical bills,” Donnelly said during his speech.
Donnelly's other provision began as the Preserving Access to Manufactured Housing Act, which would exclude manufactured-housing retailers from federal requirements affecting mortgage and loan originators and high-cost mortgages. He said the provision would allow consumers to obtain financing information from home manufacturers but prohibit housing retailers from directly advising customers on financial transactions.
Donnelly also singled out provisions of the deregulation bill that would enable Americans to freeze and unfreeze their credit without charge and that would provide free credit monitoring for active-duty military personnel.