The Senate voted last week to hold debate on S. 2155, a bill easing regulations placed on banks in the aftermath of the Great Recession.
Sudden momentum to pass banking reform at this time may come as a surprise to many given that much of the national attention is currently focused on immigration and gun control. But the Senate bill has received universal support from Republicans and has highlighted a divide between Democrats on each side of the debate. Of its 26 sponsors or cosponsors, 13 are Republican, 12 are Democrat and one, Sen. Angus King (Maine), is an independent.
Sen. Elizabeth Warren (D-Mass.), a member of the Banking Committee, is critical of the bill.
“The sad fact,” Warren told The Intercept, “is that a lot of things that are bipartisan get that way because there’s a lot of money behind the effort.”
The bill’s main controversy centers around the cap above which banks are subject to “enhanced prudential standards.” These regulations include regular stress tests to ensure the bank can survive a crisis, a plan to safely shut down if the bank fails, liquidity requirements, risk management committees, and authorization of the Federal Reserve to make certain interventions in the event of another crisis.
The cap would be raised from $50 billion to $250 billion in assets. Banks with assets between $100 and $250 billion may still be subject to some enhanced regulations selected by the Federal Reserve on a case-by-case basis. So-called “global systemically important banks” — or those considered “too big to fail” because their failure could threaten economic stability — must still comply with the current laws created under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Easing the burden of oversight and compliance could recover a great deal of savings for the relatively smaller banks that fall in the $50 billion to $250 billion range. According to research from the American Action Forum, Dodd-Frank regulations in 2017 cost the industry $2.4 billion and 8 million paperwork hours.
In a tweet, Sen. Jon Tester (D-Mont.) said he supports the reform to give small banks, which tend to invest more locally, a competitive boost because “bank consolidation is leaving communities underserved across rural America.”
As it stands, 26 banks can expect to have all or some of the enhanced Dodd-Frank requirements removed if S. 2155 becomes law. How much of the Senate’s support of the bill is driven by lawmakers’ ties to those banks is unclear.
To illustrate the scope of influence that banks wield in Washington, the Center for Responsive Politics assembled the table below as well as a comprehensive table viewable in the full data set.
Senate contributions from banks with assets of $25-$250 billion
|To Both Parties||$1,557,697||$2,460,303||$963,969|
|To Dems who supported S. 2155||$252,000||$288,887||$336,579|
|To Dems who opposed S. 2155||$288,235||$702,167||$222,975|
The table above is a summary of campaign contributions from the 26 banks and their subsidiaries to current members of the Senate. The data includes individual employee and PAC contributions to campaigns and leadership PACs. Sixteen additional banks on the threshold of the cap were also included in our research.
Using the full data set, you can sort through the donations from each bank to each current senator and filter the data by the lawmaker’s party, vote on S. 2155, cycle and more. There is a similar table for members of the House.
The full data set also includes a table showing the largest banks’ contribution totals in the last four years, sorted by which banks will be affected, as well as a table that shows how much each bank spent last year lobbying Congress and the executive branch.
Our data shows that, in total, these banks have donated $12.7 million to current members of the Senate, with the bill’s cosponsors receiving totals between $10,200 and $293,964. Sen. Mike Crapo (R-Idaho), the bill’s sponsor, has received $273,400.
The median contribution from the banks to senators who voted to advance S. 2155 is $62,500 — or 53 percent more than those who voted against it ($40,764).
Among Democrats, the median senator supporting the bill has received 125 percent more than the median Democrat opposing it ($91,763 to $40,764). Democrats who support the bill already have received more contributions since the start of 2017 than during the entire 2016 cycle (see table above).
Money hasn’t necessarily bought votes, however: The two Senate Democrats who have accepted the most money from the banks — New York’s Chuck Schumer ($1.1 million) and Kirsten Gillibrand ($729,227) — both voted against debating the bill.
The top Republican recipient of bank money who voted to debate the bill was Tennessee Senator Lamar Alexander ($449,700)
The two largest donors were the Swiss-based companies UBS AG and Credit Suisse Group, which have contributed $3.5 million and $2.2 million respectively to the current Senate. Both would fall in the range of banks subject to selective enhanced regulation by the Federal Reserve.
If the bill passes the Senate, it will move on to be reconciled with a House version passed last year that uses liquidity standards, rather than size of assets, to place banks on the regulatory spectrum.
The House vote on the Financial CHOICE Act (H.R. 10) fell almost entirely along party lines, with only one Republican voting no. Our analysis showed that the median House Republican received slightly less in their career from the 26 banks than the median Democrat ($3,474 to $3,500).
The top Republican recipient was House Banking Committee Chair Jeb Hensarling (Texas) with $246,502, and the top Democrat was fellow member Jim Himes (Conn.) with $231,583.
When considering the influence of the banks on lawmakers’ decision to advance S. 2155, the role of campaign donations tells only part of the story, particularly in respect to division among Democrats. However, the fact that large banks, such as BB&T and SunTrust, have lobbied heavily in 2017 to make their interests known in Washington may do more to explain lawmakers’ stance on the bill.
Collectively, the 26 banks facing deregulation spent almost $19 million on lobbying in 2017, an average of $721,484 per bank. The bill that received most of their attention was the Financial CHOICE Act, which was mentioned in 35 lobbying reports filed on behalf of the banks.
On the other hand, the 79 groups that signed a letter in opposition to the House bill last year spent less than $2 million lobbying in 2017 and reported lobbying directly on the bill only 10 times combined.
During the fourth quarter of 2017, 76 financial institutions reported lobbying on phrases found in the bill, such as “community banks,” “regulatory relief” and “Dodd-Frank.” Only 10 consumer groups lobbied on those issues that quarter.
Though concern for the economic health of small banks and rural states cannot be discounted as a motivation for supporters of S. 2155, the bank lobby has successfully drowned out the voice of the opposition.
Meanwhile, Americans seem to have an opposite view of financial reform: A July poll showed that 68 percent of respondents wanted more regulations on financial companies; only 18 percent wanted less.
Researcher Alex Baumgart contributed to this story