On Thursday, the House Financial Services Committee will vote on a one-sentence, bipartisan-backed bill that will save a major political player $300 million.
The legislation, introduced by Rep. Michael Grimm (R-N.Y.), will effectively allow Emigrant Savings Bank of New York to evade a portion of the Dodd-Frank Wall Street Reform and Consumer Protection Act that affects banks with over $15 billion in assets. If passed, the measure would prevent the bank from losing approximately $300 million. American Banker reports:
Emigrant currently has $10.5 billion of assets, but on Dec. 31, 2009 it had more than $15 billion. As a result, it's subject to the Collins Amendment, a section of Dodd-Frank which prevents banks above the $15 billion asset threshold from counting trust preferred securities as part of their Tier 1 capital. The House bill would push back the capital provision's enactment date to March 31, 2010, by which point Emigrant had fallen below the $15 billion mark.
Emigrant is owned by Howard Milstein, a prominent New York real estate investor whose family recently gave $2,500 in campaign contributions to the bill's sponsor, Grimm. According to American Banker, three of the measure's eight co-sponsors also received campaign boosts from the Milsteins during this year's election cycle.
Milstein was also a bundler for President Obama's 2008 presidential campaign, and is a supporter of Gov. Andrew Cuomo (D-N.Y.).
The bill is being touted as a way to help small banks. However, Emigrant is the only bank affected by this particular legislation.
Rep. Barney Frank (D-Mass.), the co-author of Dodd-Frank and ranking member of the Financial Services Committee, said during a May 18 hearing on the measure that he wasn't necessarily opposed to the bill, but did take issue with House Republicans' efforts to bring the legislation to the House Floor without a prior hearing.
"I was asked if we could do this in a way that would move quickly, and my answer was, ‘Yes, I’d like to move quickly, but I think it’s important that it be done in the light of day,'" Frank said. "Frankly, I think if it had not been done this way, someone might have drawn adverse inferences about the legislation, which aren’t justified."
While this bill has yet to catch much attention, Grimm has recently been under scrutiny after a New York Times article raised concern about his potentially fraudulent fundraising practices.
The measure, which has no public opposition thus far, is expected to be approved by the committee on Thursday.
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