Democrats line up behind targeted Dodd-Frank tweaks

Key Democrats have unanimously agreed to set a modest tweaks to the Dodd-Frank financial reform law, in an effort to build momentum for their plan over various, more dramatic GOP proposals.

On Wednesday, top Democrats on the Senate Banking and House Financial Services Committees introduced legislation that would make several targeted changes to existing financial rules, and announced that every Democrat on both committees was supportive of the proposal.

{mosads}As the two parties have duked it out over the future of Dodd-Frank, Democrats are hoping a unified approach can lend heft to their effort to keep the law largely intact, while making small changes to help small banks and credit unions.

“There is no reason why Democrats and Republicans can’t pass targeted legislation today that would give community lenders relief and be signed into law,” said Sen. Sherrod Brown (D-Ohio), the ranking Democrat on the Banking panel. “Main Street financial institutions shouldn’t be held hostage to an ideological attack on the Wall Street reform law.”

Rep. Maxine Waters (D-Calif.), the top Democrat on the House Committee, argued that their approach offered genuine relief to small financial institutions that were not the original target of Dodd-Frank, as opposed to Republicans, which she said wanted to help big banks under the guise of aiding the little guy.

Brown and Waters are among the more liberal voices on financial regulation among Democrats, but they were joined by a pair of more moderate lawmakers who also threw their support behind the measure: Sen. Heidi Heitkamp (D-N.D.) and Rep. John Carney (D-Del.).

“Our legislation fine-tunes Dodd Frank so it works as intended,” said Carney.

The details of the legislation are largely similar to an amendment Senate Democrats proposed to a bill offered by Banking Chairman Richard Shelby (R-Ala.), as well as measures already passed by the House. Most of its provisions are aimed at providing modest relief to smaller institutions by, for example, subjecting them to fewer regulator examinations.

Even though Dodd-Frank is largely finished, the fight over the 2010 law still breaks strongly down partisan lines. Democrats have resisted nearly every effort by Republicans to advance significant changes to the 2010 law, arguing that GOP proposals are aimed primarily at defanging the law, rather than improving it.

In May, the Senate Banking Committee passed Shelby’s legislation down a strict party line vote, and the White House has regularly threatened to veto GOP bills passed by the House that would change Dodd-Frank.

Shelby has said he is prepared to continue discussing ways to revisit the law, so now the relevant Democrats in the debate are presenting a unanimous front advocating for a handful of modest changes to that landmark law.