Division remains over possible rollbacks of financial regulation
A bill that rolls back regulations put in place following the 2008 financial crisis is now in the hands of the Senate. Most House Republicans say the regulations have caused harm to small businesses and banks, while providing little protection for consumers.
“The Choice Act is a great start,” said Paul Merski, Executive vice president of Congressional Relations and Strategy at Independent Community Bankers of America.
It is an effort House Republicans are pushing on Capitol Hill in the form of the Financial Choice Act. The legislation, passed in early June, rolls back many regulations put in place to ease the blow of the crisis. Merski says the hand of the federal government has devastated smaller banks.
“Instead of focusing on their communities, making loans, mortgages, they’ve spent more time, money and effort on just complying with more and more regulations,” said Merski.
He says small banks are not able to serve their communities because of regulation. Gary Cohn is the Chief Economic adviser to President Trump and was president and chief operating officer at Goldman Sachs during the financial crisis. He says some regulation in the aftermath was necessary, but Congress took it too far.
“We’re trying to get the pendulum back to a place where banks in America can get back to lending money to small and medium size businesses, so small and medium size businesses can expand, they can hire people,” said Cohn.
Others say if rollbacks are successful, we could be right back in financial disaster.
“We will have another recession driven by financial excess if we strip away these protections,” said Josh Bivens Director of research at the Economic Policy Institute.
Bivens says scars from the financial crisis still run deep. He says stripping away regulations will allow the same risky trading practices and put Americans back in dire times.
“Do we let them take that risk if it’s going to be damaging to the economy? Effective regulation doesn’t let them get excessive in their risk-taking and so we avoid that danger,” said Bivens.
The Financial Choice Act awaits a vote in the Senate.