Punchbowl News Vault: Dems splinter on community banking package

A community banking package headed to the House floor this week is dividing Democratic leadership on the Financial Services Committee.

Rep. Bill Foster (Ill.), the top Democrat on the panel’s subcommittee on financial institutions, is whipping fellow Democrats to approve the Main Street Capital Access Act, according to four sources with knowledge of the outreach. That puts Foster on a collision course with ranking member Maxine Waters (D-Calif.), who strongly opposes it and is whipping members against the package.

House Democratic leadership is also whipping against the bill, telling members in a notice obtained by Punchbowl News the bill would deregulate banks and weaken consumer protections.

The Main Street Capital Access Act is a marquee bill for House Financial Services Committee Chair French Hill (R-Ark.) and Rep. Andy Barr (R-Ky.). Taken together, the provisions of this bill would broadly ease the regulatory conditions of community banks, including de novo banks. Read the section-by-section here.  

Behind the scenes. House Republicans have worked closely with Foster and other committee Democrats in recent weeks to gather more bipartisan support for the Main Street bill, according to two aides familiar with the committee’s process.

Those discussions resulted in a series of changes to several sections of the final package, including watered down increases to certain regulatory thresholds, removing language that limited U.S. regulators from working with international bodies and tweaks to a supervisory appeals process.

It’s unclear how many House Democrats will be moved by those final changes, but we’re watching New Democrats in particular.

Counterpunch. Waters is pushing hard against the Main Street Capital Access Act.

“H.R. 6955 is a Trojan Horse sneaking in the most sweeping deregulatory measures since those that contributed to the 2008 global financial crisis,” Waters wrote in a Dear Colleague letter obtained by Punchbowl News.

Waters even invoked the legacy of former Rep. Barney Frank (D-Mass.) and the anniversary of the Dodd-Frank Act, which turns 16 on Tuesday.

“We’ve learned that Congress must do all it can to avoid another financial crisis like 2008, given how Americans lost tens of trillions of dollars in wealth,” Waters wrote. “This package ignores those lessons and will plant the seeds for the next crisis.”