Congress moved Tuesday to dismantle bank laws installed to prevent another 2008 financial crisis with a vote of 258-159 in the House. The Senate also voted to approve the bill 67-31 in March.
The new legislation rolls back the Dodd-Frank Act, which was put into effect in 2010 with the support of Democrats and President Barack Obama. The Dodd-Frank Wall Street Reform and Consumer Protection Act place heavy government regulations on the financial industry.
The goal of the Dodd-Frank Act was to prevent large banks from taking part in risky business practices that would ultimately hurt consumers. It created the Financial Stability Oversight Council (FSOC) which acted as a watchdog over financial institutions.
Large banks also had to endure an annual financial stress test conducted by the Federal Reserve to prove their stability.
Detractors of the Dodd-Frank Act believed that the burdensome regulations stifled growth and made it difficult for US companies to compete with foreign businesses overseas.
The regulations also hurt small lenders that played little to no role in the financial crisis. Small and local financial institutions provide more than half of small business loans and over 80% of agricultural loans.
The new legislation is aimed at supporting not just the big banks, but small and medium-sized banks as well, including community banks and credit unions.
However, the Federal Reserve will still have the authority to apply tough standards for large banks with $100 billion to $250 billion in assets.
President Trump promised to get rid of these regulations during his presidential campaign.
Rep. Jeb Hensarling, head of the House Financial Services Committee, said that Main Street banks “have been suffering for years under the wight” of Dodd-Frank regulations. “Help is on the way,” he said. “Today is an important day in the history of economic opportunity in America.”