Almost a decade after the financial crisis gripped America, the Trump administration introduced one of the most substantive changes to banking regulation in recent years on Tuesday.
The Dodd-Frank Act introduced in 2010 was Barack Obama’s signature legislation on financial regulation, introducing stringent rules on US banks to avoid a repeat of the credit-fuelled bust of the late 2000s.
On Tuesday, the House of Representatives voted 258 to 159 to repeal the Act, following the Senate’s endorsement of the changes earlier this year. The new Bill is expected to be on Trump’s desk for signing by the end of this week.
"The House just voted to free our economy from overregulation," house speaker Paul Ryan tweeted excitedly as the vote was passed.
Republicans were quick to point out that the real aim of the Bill is to help small businesses access finance, and rid banks of meddlesome regulation that prohibits their ability to lend. America’s top-10 banks are excluded from the measures. Instead, small and medium-sized banks will no longer be subject to stress tests and will also be excluded from disclosure requirements for mortgage loans – moves that will help consumers and small businesses access finance. The argument that the changes will help Main Street, not Wall Street, was bolstered by the fact that 33 Democrats crossed the aisle and voted for the Bill.
Anti-capitalist message
The voting breakdown captures the dilemma facing many Democrats in the current political climate. As the memory of the financial crisis recedes, it is questionable how far the anti-bank, anti-capitalist message of left-wing Democrats like Bernie Sanders and Elizabeth Warren resonates with voters. Conscious of Donald Trump's success in tapping into the real-life concerns of ordinary working-class Americans in the 2016 election, many believe it is more important to show their voters they are on their side when it comes to accessing finance and credit.
As the country heads into the mid-term elections in November, the strong economy is one of the Republican party’s strongest calling cards. Democrats will be conscious of raining on that parade and showing that they too can be the party to manage the economy.
