The 17 Democrats selling out on bank regulation is worse than it looks

[octoberlib]

10. Democrats are in a good bargaining position but they're just giving away the store.

This bill goes far beyond the health of community banks and credit unions. It removes protections for 25 of the top 38 banks; weakens regulations on the biggest players and encourages them to manipulate regulations for their benefit; and saps consumer protections.What do Democrats get in return? Nothing substantive that they should want. They could demand better funding for regulators or an appointment to the Consumer Financial Protection Bureau — or a vote on gun control.

The Crapo bill will introduce a one-word change from “may” to “shall” that will pave the way for the biggest, most politically connected financial firms to argue that regulations should be tailored to be weaker for themselves, creating a race-to-the-bottom dynamic in what has been, so far, fair rules written for all banks to follow together. It allows community banks to violate the Volcker Rule, introduced in Dodd-Frank to prevent banks from engaging in hedge-fund-like gambling with their own funds.

This bill also hurts consumers. It removes protections on mobile homes and appraisal requirements in rural areas, while getting rid of the requirement that smaller banks prove that borrowers can repay subprime loans they make and keep on their own books. All of these read as if they were written to appease a specific lobbying group, rather than out of a concern for consumer security.

The most serious consumer protection rollback involves banks reporting on the mortgages they offer. The Crapo bill will exempt banks that make fewer than 500 mortgages — which includes nearly 85 percent of banks — from reporting important mortgage data. This data is used to ensure that discriminatory or other abusive practices aren’t happening. This exposes minority communities and rural areas, voters Democrats need to win over to gain viability, to increased predation.

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