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The biggest Wall Street bill in years is tearing Democrats apart

Elizabeth Warren is blasting fellow Democrats for their support of a Wall Street deregulation bill, but many of these moderate members are pushing back.

  • The Senate is close to passing a bill that would roll back a slew of Wall Street regulations.
  • Democrats are divided on the bill, with Sen. Elizabeth Warren leading the fight against the measure.
  • A solid group of Democratic moderates are in favor of the bill and pushing back against Warren.

The push to pass the largest rollback of banking regulations since the financial crisis is splitting the Democrats in the Senate in two.

One the one hand, the banking deregulation bill championed by Republican Senate Banking Committee chair Mike Crapo has garnered the support of a solid group of centrist Democrats who see it as a way to ease restrictions on smaller community banks.

On the other, more liberal Democrats are blasting the bill as a giveaway to Wall Street and a repeat of the same mistakes that led to Wall Street's collapse.

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For Democrats opposing the Crapo bill, the legislation is a dangerous rollback of the post-crisis Dodd-Frank regulations and could precipitate another financial crisis.

The most vocal opponent of the bill, unsurprisingly, is Sen. Elizabeth Warren.

Warren, a long-time critic of Wall Street and the financial sector, has given a series of speeches in the Senate decrying what she calls the "."

The Massachusetts senator took particular issue with a provision of the bill that would increase the threshold for a bank to be designated a Systemically Important Financial Institution (SIFI) by regulators to $250 billion in assets held from $50 billion currently.

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This would exempt 26 of the current 38 SIFIs from these tough regulations, including major regional banks like BB&T, PNC, Fifth Third, and SunTrust.

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Other Democrats, like Sen. Chris Van Hollen, said that some of the adjustments for smaller banks make sense but agreed with Warren that the current bill takes the deregulation too far.

"I have some concerns about the banking bill," Van Hollen told Business Insider. "I should start by saying the provisions relating to community banks and credit unions are provisions I support for the most part. In my view, some of the changes with respect to the bigger banks introduce too much risk into the system."

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Sen. Doug Jones, the recently-elected member from Alabama, argued that the more dire warnings about the financial effects from the bill may too far.

"I don't think it will [have negative effects]," Jones told Business Insider. "Those banking bills are always a work in progress and I think this is a step for us. It's not a perfect bill, but I think it's a good step forward."

"We're seeing way, way, way too many banks being eaten up by bigger banks," Tester told the Wall Street Journal. "If this continues, I don't think we can expect the Wall Street banks to be serving places like Montana."

Some red-state Democrats are even taking on Warren directly. Sen. Heidi Heitkamp gave a speech on the Senate floor on Tuesday to push back at some of her colleagues' concerns about the bill.

bill within the Democratic Party may not just be rooted in policy, but upcoming elections.

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Both Kaine and Tester are up for re-election in 2018 and many strategists have surmised that the support from moderate Democrats is a pivot to the center to shore up electoral chances. Ten of the Democratic supporters of the bill are from states that Trump carried in 2016 and are up for re-election this year.

Senate Minority Leader Chuck Schumer recently came out against the bill after keeping quiet since it moved out of committee in December. Schumer echoed other Democrats, saying the bill's deregulation efforts go too far in easing restrictions on large regional banks.

At the same time, the minority leader did not stand in the way of Democrats supporting the bill.

Sen. Joe Manchin, a moderate from West Virginia, told Politico that Schumer's message on the bill to members was, "Everybody do what they got to do."

With the pass from the leadership, the Democratic support will likely push the Crapo bill across the line before the end of the week.

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