Senator Jon Tester called a press conference yesterday after the banking de-regulation bill he co-sponsored passed the Senate. The bill rolls back restrictions for some banks enacted in the Dodd-Frank Act, which was passed in the wake of the financial crisis of 2008.
Tester’s bill was popular with Senate Republicans, and won support from 15 other Democrats.
"Our bipartisan bill will cut the unnecessary red tape for small community banks and credit unions in Montana, so that families, small businesses and farmers and ranchers are able to access the capital and the business loans that they need to expand their operation or survive through a difficult time," Tester says. "Our bill will remove regulations for banks on main street, while holding Wall Street banks accountable."
Tester says his bill helps small banks by freeing them from the cost of complying with expensive regulations in the Dodd-Frank law. Dodd-Frank places tighter restrictions on banks with more than $50 billion in assets. Tester’s bill removes those restrictions on banks with up to $250 billion in assets.
Most Senate Democrats voted against Tester’s bill, including Elizabeth Warren of Massachusetts, speaking here on C-SPAN.
"Only a bunch of bank lobbyists and their friends in Washington would call this a consumer protection bill," Warren said.
"I don’t agree with my wife on everything, certainly don’t agree with Elizabeth Warren on this," Tester says.
Tester insists that his co-sponsorship of the de-regulation bill is motivated by a desire to keep small banks in Montana healthy into the future.
Political analysts point out that Tester is up for re-election this year in a generally very conservative state.
"You may not believe this, but this is a fact, this really isn’t about the election. It really is not, it’s about trying to keep access to capital for rural communities around the state of Montana," Tester says.
Montana’s Republican Senator Steve Daines also voted for the banking de-regulation bill. It now goes to the House, where Tester says he believes it will pass as long as House members don’t modify it.
You can read the bill here: https://www.congress.gov/bill/115th-congress/senate-bill/2155
The Associated Press published a fact check of Senator Tester’s claims about the banking bill. It says Tester has repeatedly said the 2010 Dodd-Frank Act has led to Montana losing many small banks, particularly in rural areas.
The AP says his comments made in defense of the bill on the Senate floor last week are mostly true in and of themselves, but taken together, they paint a misleading picture of Wall Street firms gobbling up and shutting down small-town banks.
Tester has said that, “since the passage of Dodd-Frank, the number of banks in … Montana … (has declined by) close to 30 percent."
The AP says that’s true, but there has not been an actual bank failure in the state during that period.
Instead, small banks have merged with or been bought out by other banks. And Montana banks have consolidated several of their branches' charters under one charter.
There has also been a long trend of community banks being bought out by larger banks that pre-dates Dodd-Frank. The number declined by nearly 60 percent between 1985 and 2010.
Tester contends that Dodd-Frank has accelerated the rate of community bank mergers and acquisitions, and he said today that the new bill will slow the rate.
An Associated Press analysis of 25 bank mergers and acquisitions in Montana since 2010 finds that all but three of the community banks being acquired were bought by other Montana-based banks - nearly all of which are also community banks.
Nearly all of the bank branches in rural areas of Montana that were bought out since Dodd-Frank's passage have remained open. There was only a 2 percent reduction in the total number of bank branches in the state between 2010 and 2017 - according to the Montana Division of Banking.
Tester asserts that even though the doors haven't closed on the physical structure, a rural bank is fundamentally changed after an acquisition, with different leaders and a different business model that is no longer tailored to fit the community.