Supporters of the fix-it bill "argue that smaller financial institutions shouldn't have to face the same set of strict rules as behemoth Wall Street banks that could endanger the whole financial system if they go under. Top bank regulators all agree fixes should be made for community banks," Donna Borak reports for CNNMoney.
"Main Street businesses and lenders tell me that they need some regulatory relief if we want jobs in rural America," Democratic Sen. Jon Tester of Montana said during a hearing on the bill in November. "These folks are not wearing slick suits in downtown New York or Boston. They are farmers, they are small business owners, they are first-time home buyers."
The fix-it bill would raise the definition of a "too big to fail" bank from one that has $50 billion in assets to $250 billion, meaning more than two dozen midsize banks would be exempt from Dodd-Frank regulations. These banks would no longer have to hold as much capital to cover balance-sheet losses, wouldn't have to have plans in place to be safely dismantled if they fail, and would only have to take the Federal Reserve's bank health test once in a while instead of yearly.
The bill was drafted by Republican Sen. Mike Crapo of Idaho, the chairman of the Senate Banking Committee, and is backed by 12 Democrats and 12 Republicans. It's a narrowly focused, moderate compromise that Crapo hammered out after years of bipartisan negotiations. The bill could be heard on the Senate floor as early as next week. The House would like to do more, but is expected to go along because the bill goes about as far as one can go and get the 60 votes needed for passage in the Senate.