THERE’S LOTS not to like in the partial rollback of the Dodd-Frank financial regulation law that passed the House on Tuesday, and which President Trump signed Thursday. One provision would redesignate banks with up to $250 billion in assets as no longer subject to the strictest level of supervision. It would relax capital requirements for large custodial banks in a way that might allow certain large commercial banks to escape strict capital rules as well. And the main purpose of the legislation, regulatory relief for supposedly struggling community banks — defined as those with less than $10 billion in assets — was hardly urgent, considering that community bank profits were up 17.7 percent in the first quarter of 2018, as compared with the same period a year earlier. Populist Democrats, led by Sens. Elizabeth Warren (Mass.) and Sherrod Brown (Ohio), decried the bill as yet another Washington sellout to Wall Street.
That’s hyperbole: The 33 Democrats who supported the measure in the House, and the 17 Democrats who backed it in the Senate, would not have done so otherwise. From early on, it was clear that the Democrats (mostly from rural states) who supported the bill were doing so in deference to their community-bank constituents, and that they would not go along with anything as wildly favorable to the big institutions as the populists assert.
The big story about this bill, in fact, is not how much damage the Wall Street lobby has managed to do to Dodd-Frank, but how little. Among financial-industry wishes Congress did not grant, probably the most significant was to gut the Consumer Financial Protection Bureau, which is admittedly being weakened administratively by the Trump administration, but whose statutory powers and sources of funding remain intact under the new bill. Also still intact are annual stress tests for major banks and the system for federal crisis resolution at failing institutions, known as the Orderly Liquidation Authority.
This moderately pro-industry tweak is all opponents have to show for eight years of hammering Dodd-Frank as a drag on economic growth. This is all they got, even after the election of a president who pledged to do a “big number” on the law, and Republican majorities in both houses of Congress. The basic architecture of the 2010 act remains; it’s arguably that much stronger for having withstood so much pressure. Indeed, members of both parties have now signaled that they are willing to live with it. Entirely satisfactory to none, but minimally acceptable to most, the Dodd-Frank system, as newly amended, now represents that rarest but, potentially, most durable of American political phenomena: a consensus.