A Senate panel on Tuesday approved legislation that would provide banks and credit unions with relief from some of the stricter regulatory requirements put in place after the 2008 financial crisis.
The bill, which was approved by a 16-7 vote, raises the threshold at which bank holding companies are considered too big to fail, thus subjecting them to financial stress tests and a capital-planning review. The threshold would increase from $50 billion to $250 billion.
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The panel rejected an array of amendments that senators said could unravel a bipartisan agreement crafted over several months.
The bill is much narrower than what the House passed earlier this year in an effort to undo much of the financial law, known as Dodd-Frank. That bill had no chance of gaining the 60 votes necessary to overcome a filibuster in the Senate.
Supporters from both major parties said the Senate legislation would make it easier for credit unions, community banks and many regional, midsized banks to lend money and enhance economic growth.
"This package of common-sense reforms recognizes that it is important to tailor regulation appropriately," said Idaho Sen. Mike Crapo, the Republican chairman of the Senate Banking, Housing and Urban Affairs Committee.
Some Democratic lawmakers opposed the measure. Ohio Sen. Sherrod Brown, the ranking Democratic member of the committee, said banks will save money, but working people struggling with student loan debt and underwater mortgages won't.
"If we learned anything from the financial crisis, it is that deregulation of the banks doesn't create economic growth. Instead, it puts millions of Americans at risk, like the 5 million families who were foreclosed upon during the crisis," Brown said.
In the end, every Republican on the panel voted for the measure, along with four Democratic senators.
"As I travel across Montana, Main Street businesses and lenders tell me that they need some regulatory relief if we want jobs in rural America," said Republican Sen. Jon Tester of Montana.
"We tried to fix too-big-to-fail and we created too-small-to-succeed," added another supporter of the measure, Democratic Sen. Heidi Heitkamp of North Dakota.
Under the bill, banks with less than $100 billion in assets will be exempt from some of the stricter oversight immediately. Those with assets of $100 billion to $250 billion are presumed exempt after 18 months, with the Federal Reserve retaining authority to apply stricter requirements if appropriate.
The American Bankers Association urged Senate Majority Leader Mitch McConnell, R-Ky., to bring the bill to a vote on the floor as soon as possible, saying the bill will "open doors of opportunity for more creditworthy borrowers and businesses, and it will contribute to economic growth and job creation."