Behind the scenes, bank lobbyists temper expectations of Dodd-Frank reform

© Reuters. Trump signs executive order at White House in Washington

By Pete Schroeder

(Reuters) – Lobbyists at the banks that opened the Trump era with high expectations for radical regulatory reform are taking an increasingly depressing tone in private as hopes for a swift and comprehensive rewriting of the Dodd-Frank legislation fade. .

Lobbyists say they are faced with the reality that bank deregulation legislation will have to wait in line behind other more important priorities, such as health care and tax reform.

“It’s so daunting,” said a representative from the financial industry. “I was excited about this year, and I’m not excited anymore.”

Even if Congress seeks to rewrite the 2010 Dodd-Frank Act, it is unlikely to get enough votes in the Senate for the strong sweeping reform that industry leaders hoped for, roughly half a dozen lobbyists told Reuters in recent interviews.

Banks say Dodd-Frank, which was conceived in response to the financial crisis, is holding up their growth.

Among the Dodd-Frank measures banks want changed are a ban on the law on trading on their own account, greater supervision of some of the nation’s largest institutions, and stricter capital requirements.

But they see short-term hopes for less stringent oversight by agencies like the Federal Reserve or the Securities and Exchange Commission hampered by the slow pace of Trump’s appointments to those agencies.

The private gloom stands in contrast to the optimistic message delivered to some 1,500 bankers gathered in Washington this week to visit Congress and speeches by policymakers at an American Bankers Association (ABA) conference. “This year presents the biggest opportunity we’ve seen in a long time to see some action on much-needed regulatory relief,” said Rob Nichols, ABA president and CEO, at the conference.

Senate Banking Committee Chairman Mike Crapo, the Idaho Republican who will play a key role in any regulatory rewrite, has downplayed immediate expectations. He has emphasized that work in the Senate is slow.

Crapo announced Monday that he wanted public comment on the proposals, underscoring the deliberate pace of the panel’s work.

And the Republican chairman of the House Representative Financial Services Committee, Jeb Hensarling, has yet to make progress on his prepared review of Dodd-Frank.

Industry advocates say they hope sympathetic regulators can take important steps in the absence of congressional action. But the Trump administration has been late in appointing people to key roles, such as the Federal Reserve’s vice president of oversight.

For example, a comprehensive Federal Reserve could relax the “living wills” process applied to large banks to determine how they could be dissolved if necessary. And a friendlier SEC could act to reverse the rules on measures that oppose the industry, such as requiring companies to disclose the salary relationship between their CEO and the average employee.

To be sure, this year there will probably be some action to help the banks, although it is likely to be much more limited than Trump’s transition team kept bankers waiting when he said a day after the November election that he would “dismantle “Dodd. -Frank.

There seems to be a bipartisan appetite for loosening capital formation rules or reducing regulations that smaller banks and credit unions must adhere to.

Republicans in Congress could attack specific parts of Dodd-Frank, such as gaining control over funding from the Consumer Financial Protection Bureau, which was created to help protect people from mortgage, student loan and other fraud. financial products, through a budget process that eliminate the need for Democratic support.

Bankers preparing to head to Capitol Hill to make their case heard James Ballentine, a lobbyist for the ABA, emphasizes the need to stay in the message with stories about the impact of regulation on their banks. He noted that they would compete with allegations of wiretapping, Federal Bureau of Investigation polls, Supreme Court confirmation hearings and a massive push for health care all at once.

“None of those things should be a topic of conversation when you go to meet with your members of Congress,” he warned the conference crowd.