Congress made the bipartisan decision Tuesday to exempt all but 10 U.S. banks from key regulations in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.
The act was passed after the 2008 economic crisis, which was brought on by decades of risky lending on the part of Wall Street banks.
However, on Tuesday, Congress voted overwhelmingly — 258-159 — to exempt banks with less than $250 billion in assets, despite the fact that banks’ profits are skyrocketing.
Thirty-three Democrats voted to exempt the banks from the key regulations put forth in the Dodd-Frank Act even though a report issued by the Federal Deposit Insurance Corporation (FDIC), showed that the net income of banks and financial institutions reached $56 billion by the end of the first quarter this year, which is a 27% increase over last year.
If the exemptions are approved, there will only be 10 banks left in the United States that will be subject to federal oversight.
The regulations outlined in the Dodd-Frank legislation were designed to prevent another financial crisis like the one in 2008.
Previously, any bank with assets in excess of $50 billion was considered a “systematically important financial institution,” (SIFI), basically meaning that it’s a bank that is too big to fail.
Congress’ decision Tuesday means that any bank with less than $250 billion in assets is no longer considered “systemically important” and will be released from federal oversight requirements.
The decision is being celebrated by small, regional banks and local credit unions, which are grateful for the decreased oversight.