In the News

Banking industry lobbyists and representatives are practically salivating over the election results, convinced that Republican control of the White House and Congress will finally give them the opportunity to roll back key parts of the Dodd-Frank Act.

President-elect Donald Trump's transition team declared war Thursday on the 2010 financial reform law, vowing to "dismantle" it while blaming the law for slow economic growth.

"The Dodd-Frank economy does not work for working people," the transition team said. "Bureaucratic red tape and Washington mandates are not the answer. The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation."

Changes to the financial reform law have effectively been off-limits under President Obama, who helped usher in the legislation and used veto threats to deter efforts to weaken financial regulation.

But the combination of GOP control of the legislative and executive branches and a 2018 election map that threatens vulnerable Democrats gives the industry its best chance in six years to change the law.

"It bodes better for achieving community bank regulatory relief to have the same party in charge of the administration and the Congress," said Paul Merski, executive vice president of congressional relations at the Independent Community Bankers of America.

Republicans lost two seats in the Senate and another six in the House, but in 2018, 25 Senate Democrats will be defending their seats with eight to 10 of them (depending on the final results of Michigan and New Hampshire) being in states won by Trump. In contrast, just eight Republicans are up for re-election.

"I think they would be more than willing today to offer and support bipartisan legislation" that would amend parts of Dodd-Frank, said Richard Hunt, president and chief executive of the Consumer Bankers Association.

Democrats have already said they support some regulatory relief, though they differ with Republicans over what to change and how far to go.

The most likely vehicle for change is the Financial Choice Act offered in September by House Financial Services Committee Chairman Jeb Hensarling. (The Texas Republican is close to Vice President-elect Mike Pence, and The Wall Street Journal said Thursday that Hensarling was being considered as Trump's pick for Treasury secretary.)

Hensarling's far-reaching bill would allow banks that hold higher capital to face a simpler set of regulatory requirements, and make a number of changes to federal regulators.

"We put down the marker with the Choice Act in this current Congress," Rep. Scott Tipton, R-Colo., who sits on the committee, said in an interview. "When we move into the next Congress, I believe we have a number of good markers down to be able to address a variety of overreach we have seen" with Dodd-Frank.

Still, Dodd-Frank reforms will require at least some Democratic support to clear the Senate.