Democrats Who Voted to Deregulate Wall Street Got Wiped Out in a Setback for Bank Lobbyists

(THE INTERCEPT) December 24, 2018 — THE MOST HIGH-PROFILE bipartisan legislation of the Trump era turned out to be electoral poison — or at least, not a prophylactic — for the Senate Democrats who decided to support it, which could serve as a lesson for party leaders wishing to join with the president on other bills next year.

The “Crapo bill,” a bank deregulation measure co-authored by Senate Banking Committee chair Mike Crapo, R-Idaho, and several centrist Democrats, passed Congress this spring with the help of 17 members of the Senate Democratic Caucus and 33 House Democrats.

In the 10 states where Donald Trump won in 2016 and a Democratic senator stood for re-election this year, the three who opposed the Crapo bill all won a greater share of votes in their states than the seven who voted for it. Senators voting “no” averaged 54.7 percent of the vote and won by 10 percentage points, while the “yes” votes averaged 48.1 percent and lost by 1.5 points. The only Republican who lost, Dean Heller of Nevada, also voted for the Crapo bill, and fell by 5 points to Jacky Rosen, who voted against the legislation in the House.

The Crapo bill rolled back a number of elements of the Dodd-Frank Act, including, in particular, stiffer regulations on banks that have between $50 billion and $250 billion in assets. A recent proposal from the Federal Reserve, using authority granted by the Crapo bill, expands that deregulation up to banks with as much as $700 billion in assets.

Senate Democratic supporters justified their votes by casting the legislation as a tweak to benefit community banks in small towns and rural areas, despite its greatest impact occurring well up the chain. In fact, the bill has already led to accelerated consolidation and further disappearance of community banks.