As this report details, today’s Senate Banking Committee hearing on financial regulation showed not only sharp divides between Democrats and Republicans, but also little moderate-Democratic sympathy for the compromises that crafted EGRRCPA last year and so far characterize data-privacy work (see Client Report PRIVACY84) in this Congress. Chairman Crapo (R-ID) wants EGRRCPA’s tailoring (see FSM Reports SIFI30 and SIFI31) increased, the community-bank leverage ratio (see FSM Report LEVERAGE16) liberalized, and Volcker changes (see Client Report PROPTRADE25) increased. He also wants more transparent guidance and reduced business-relationship restrictions in the Federal Reserve’s “control” proposal (see FSM Report TAKEOVER8). In sharp contrast, Ranking Member Brown (D-OH) was harshly critical of the tailoring rules as well as of recent FSOC action to redesign the non-bank SIFI framework (see FSM Report SIFI32). He argued that all of these changes adversely affect economic equality, a statement Sen. Crapo and all of the bank regulators rejected. Sen. Brown also stressed the need for Fed action to control leveraged-lending risk, with Vice Chairman Quarles countering that leverage lending might exacerbate a downturn but poses no financial-stability risk.
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