WASHINGTON, D.C. — Dodd-Frank. The Consumer Financial Protection Bureau. Housing market reform. Banking regulations.
Many issues that fall under the purview of the Senate Committee on Banking, Housing and Urban Affairs will likely be hot topics in Washington next year, and Idaho’s senior senator will likely play a big role in deciding what moves forward and what doesn’t.
It isn’t certain that Mike Crapo, the second-ranking Republican on the committee after Chairman Richard Shelby, will move into the top spot when Shelby steps aside from the role because of GOP caucus term-limiting rules, and Crapo says he doesn’t take it for granted that he will. But he’s also not aware of any competition for the post.
“At this point in time it looks very good,” he said.
The committee, Crapo said, has oversight over more issues than many people realize — international trade sanctions, for example, fall under its authority. However, Crapo said, he expects housing market reforms, specifically the bill he co-authored with South Dakota Democrat former Sen. Tim Johnson to get rid of Fannie Mae and Freddie Mac; changes to the 2010 Dodd-Frank financial regulatory bill; and reducing regulations on small community banks and credit unions to be some of the big issues the committee will deal with in 2017.
“It will be a very interesting and important set of issues for the Senate to be dealing with,” he said.
President-elect Donald Trump criticized Dodd-Frank heavily while campaigning, a position he shares with Crapo and with many other Republicans, who have argued the regulations in the bill, which was passed in hopes that its stricter rules would help to avoid a repeat of the 2008 crash, have harmed the economy.
“I strongly opposed it when it was being debated on the floor and voted against it,” Crapo said of Dodd-Frank in general. “I have been working to reform its excesses for a long time.”
To give one example of a fight that could play out in the committee next year, some Republicans are calling for major changes to, or even abolishing, the Consumer Financial Protection Bureau, which was created by Dodd-Frank and charged with protecting consumers’ interests in their dealings with banks and other financial institutions. Crapo has, in the past, expressed concerns about the powers the law gives the CFPB to collect data on consumer spending habits.
However, Crapo thinks some aspects of Dodd-Frank have been helpful. Provisions requiring banks to hold more capital in reserve, he said, has helped to “create a more stable protection against the need for taxpayer bailouts.”
Trump has also called for a return to the separation of commercial and investment banking that was part of the 1933 Glass-Steagall Act and was repealed in 1999. Crapo said he supports making sure “there’s safety and soundness in the regulatory system” to make sure banks “don’t play the markets with their customers’ investments.”
“That’s not to say banks shouldn’t have the ability to invest their own earnings,” he said. “And finding that appropriate line is important.”
Congressional Democrats have promised to fight some of the major changes to Dodd-Frank the Republicans have called for. Reducing regulations on smaller banks could end up being an easier lift than some of the other changes the Republicans would like, although it remains to be seen if any attempts to do this will get caught up in fights over the other provisions or not. Ohio Sen. Sherrod Brown and Montana Sen. Jon Tester told Morning Consult last week that they would be willing to work with the Trump administration on this.
Idaho, Crapo said, “has lost a pretty significant percentage of its community banks” due to regulations, Crapo said, “and ultimately this damage ripples through to small businesses and individuals alike.”