The United States Congress is gradually preparing to significantly roll back the Dodd-Frank Act, the critical piece of regulatory legislation implemented in the wake of the Great Recession. In a 67-31 vote late Wednesday, the Senate voted to pass the sweeping Economic Growth, Regulatory Relief, and Consumer Protection Act, which would relax regulations on lending institutions if enacted. All 51 Republican senators voted in favor of the bill's passage; they were joined in their vote by 16 moderate Democrats. The bill will now go to the Republican-controlled House of Representatives, where it is likely to undergo changes before being returned to the Senate.

A landmark piece of deregulatory legislation, the bill passed by the Senate on Wednesday would drastically lower the number of banks that are under the strictest levels of scrutiny by the Federal Reserve. After the passage of the Dodd-Frank Act in 2010, banks with assets totaling over $50 billion are considered systemically risky and subject to the most stringent oversight, including yearly stress tests to assess their ability to withstand a financial crisis.

The Senate-approved bill would raise by 500% the threshold at which banks subject to greater oversight, from $50 billion in assets to $250 billion. Lenders with assets between $50 billion and $250 billion, a category that includes prominent institutions like SunTrust Banks Inc (STI  ) and BB&T Corporation (BBT  ), would become exempt from the toughest financial regulations. The measure reduces oversight on all but the largest banks and loosens regulations on mortgage lenders.

As one of the hallmark achievements of Barack Obama's presidency, the Dodd-Frank Act has been the subject of a number of rollback attempts by Republicans in Congress. Proponents of this latest attempt contend that Congress should relax unduly burdensome regulations on credit unions, regional banks, and other smaller financial institutions. Those who oppose the bill argue that the measure was drafted with banks, not consumers, in mind, and that it leaves taxpayers on the line for another potential big bank bailout, as in 2008.

The bill's passage through the Senate has only been possible because of the support of 16 Senate Democrats, a dozen of whom were co-sponsors of the bill. Senator Mike Crapo (R-ID), the chairman of the Senate Banking Committee, led the drafting of the memo, but was joined by moderate Democrats, including Heidi Heitkamp (D-ND), Jon Tester (D-MO), and Joe Donnelly (D-IN), who are up for re-election in this year's midterms. In arguing for the bill's passage, Crapo pointed to bipartisan support for the proposed legislation, saying, "This bill shows that we can work together and do big things that make a difference in the lives of people across this country."

Despite Crapo's claim of bipartisan support, the majority of Senate Democrats did not endorse the measure, with a number of prominent members vocalizing their strong opposition to any such deregulation. Massachusetts Senator Elizabeth Warren, a potential Democratic candidate in the next presidential election, called the bill "the bank lobbyist act."

Sen. Elizabeth Warren
Sen. Elizabeth Warren

Both Warren and Senator Sherrod Brown (D-OH), the top Democrat on the Senate Banking Committee, warned that rolling back key regulations on banks would put taxpayers at risk and could set the stage for another potential financial crisis on the scale of the Great Recession.