JUDY WOODRUFF: A decade after
the financial crisis spurred
tough financial regulation,

the U.S. Senate took a
step toward rolling back
some of those rules today.

Republicans were joined by
more than a dozen Democrats to
move forward with a bill easing

requirements on banks
worth $50 billion to
$250 billion in assets.

Specifically, those institutions
wouldn't have to pass an
annual stress test, as it's

called, to make sure they are
strong enough to survive a
financial panic or keep as much

capital on hand.

Critics, including
most Democrats, worry
that these moves could
increase the chances of

bank bailouts in the future.

But Senator Heidi Heitkamp,
a Democrat from North Dakota,
supports it, and she joins me

now.

Senator Heitkamp, welcome
to the "NewsHour."

And I want to get to the
banking story in just a moment,
but first I have to ask you

about our lead tonight, and that
is the surprise announcement
from the White House that the

president's chief economic
adviser, Gary Cohn, is stepping
down after what has clearly been

a dispute with the president,
who he works for, over imposing
tariffs on imported steel

and aluminum.

What's your thought about that?

How is that going to
affect trade policy?

SEN.

HEIDI HEITKAMP (D),
North Dakota: Well, I'm
deeply concerned that
we won't have that voice

that is the voice of reason in
the White House as it relates
to economic understanding of

the importance of trade.

Less than 5 percent globally
of people in the world
live in this country.

If we're not trading,
we're going to fail.

I think that one of the biggest
concerns I have with the White
House is their trade policy.

Gary was a great advocate for
common sense as it relates to
trade, and I find it deeply

disturbing that he
will be leaving.

JUDY WOODRUFF: What does it
mean for your state or North
Dakota if these tariffs take

effect?

SEN.

HEIDI HEITKAMP: Well,
we don't know yet which
countries are going to be
involved, but obviously

all of the concerns about
renegotiating NAFTA has
had huge ramifications
in our relationships

across both borders, both
Mexico and Canada, which are
our largest trading partners.

We are deeply concerned about
the renegotiation of NAFTA and
retaliation in the event these

tariffs go into effect.

JUDY WOODRUFF: Well, let me
ask you now about this banking
legislation that moved forward

in the Senate today.

As we said, it would exempt
something like two dozen
banks, financial companies that

are somewhere between
$50 billion and $250
billion in assets.

They wouldn't be subject
to the same sort of federal
oversight that they are now and

other requirements.

Why -- as you know, the concern
about this is that it means if
we come to the next financial

crisis in this country, these
banks are going to be back
where we were in 2008, needing

a big bailout from the
federal government.

SEN.

HEIDI HEITKAMP: Well, I
think that's completely
overstating the case.

Number one, I think at the
top of the hour you said that
they no longer are going to

be subject to stress tests.

That's not true.

The Fed has complete ability to
stress test and to put anyone
back into that designation

if it's appropriate.

But remember this,
because Countrywide has
been used as an example.

We have not changed the
rules as it relates to
qualifying mortgages.

We have not changed the
rules as it relates to
whether the Fed can stress
test these institutions.

We still have
liquidity standards.

And so what we did is, we
basically moved an assumption.

And that assumption is that,
if you're below $50 billion,
you do not present systematic

risk to the economy.

We said let's take a look
at 250 as the presumption,
but anything below that,
where there is systematic

risk, could still be
included and still be
regulated accordingly.

JUDY WOODRUFF: Well, there
still would be - - as you say,
there would be some stress

testing, but much less than
what we're talking about now.

The small banks, as we
understand it, would
no longer -- there
would no longer be some

protections for homeowners,
for example, to go to court to
prevent wrongful disclosures.

In other words, these banks
are being given a break because
they say there's just been

too much paperwork.

SEN.

HEIDI HEITKAMP: I think that's
way overstating the case.

Let me tell about North Dakota.

North Dakota doesn't have those
institutions making mortgages
because the compliance costs

are way too expensive for
these small community banks.

And, as a result, they're either
doing loans that are recourse
loans, using other collateral

like your paycheck, as opposed
to your mortgage, or they're
basically transitioning those to

large banks like Wells Fargo.

And when you don't have
relationship lending,
you're losing a big part
of that capitalization

in rural communities.

And so the
protections are there.

And, you know, I find
it interesting, because
people always want to
say, oh, these banks

are going to take advantage
of all these consumers.

These banks are run
by your neighbors.

They're owned by your neighbors.

They have been doing business
for years and generations
in these communities.

And I think they know better
what the community needs
than a federal regulator.

And let's put this
back in focus.

The reason why you have the
mortgage standards that you
have is to prevent a collapse of

the economy using mortgage as
a collateral in derivatives.

So if you take these small
community banks, they were never
part of the too big to fail.

And what we have created
from too big to fail is
too small to succeed.

And so I have total confidence
that my community banks know
better what my communities need

than a federal regulator who
is trying to impose big bank
standards on our small community

banks.

JUDY WOODRUFF: How do you know,
though, Senator Heitkamp, that
-- there are -- clearly, some

regulations need to be in place.

How do you know that the
right regulations are
still going to be in place?

For example, there is concern
about whether banks, they
won't have to report -- some of

them, a number of them won't
have to report the diversity
of people that they lend money

to.

In other words, there are
some regulations in there now
that people say that need to

be continued, whether
they are done in exactly
the same way or not.

SEN.

HEIDI HEITKAMP: Well,
let's take the HMDA rules.

And that's been a point
of contention here.

We are not eliminating the
standard of making sure that
we have fair lending rules.

There were fair lending
rules before Dodd-Frank.

The HMDA rules, which have
been covered by all banks, are
40 pages of regulation that

doesn't actually add any
value to making sure that
there isn't discrimination.

We're saying, look, we will
eliminate that rule-making
for the smaller institutions,

but if you fail, if you're
a bad actor, we're going to
impose these regulations back on

you.

And the one thing that I think
is critically important, when
you over-regulate, eventually,

you reach a tipping point where
everything is at question.

We are doing very
modest and very limited
changes to Dodd-Frank
to respond to what we're

hearing on main streets in
small communities like mine.

And we're proud of this bill.

We think that the results of
this bill have been completely
overstated by people who have

been advocating against this
bill because they want to
see fundamentally absolutely

no change to Dodd-Frank,
even if the regulation
doesn't make sense.

JUDY WOODRUFF: Senator
Heidi Heitkamp of North
Dakota, thank you very much.

SEN.

HEIDI HEITKAMP: Thank you, Judy.