Regional banks are gaining ground ahead of a vote to roll back parts of Dodd-Frank

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Regional bank stocks are jumping hours ahead of a Senate vote on whether or not to roll back some key pieces to the Dodd-Frank Act, a post-financial crisis law that laid out protectionary measures against another crisis. Here’s a look at the scoreboard:

The rollback is widely expected to pass, as not only do Republicans have the majority of Senate seats, but some Democrats are in support of the roll back.

A key reason regional banks are expected to benefit from a “yes” vote is because the bill would expand the number of those not subject to stringent Dodd-Frank regulation.

One core part of the bill would increase the amount in assets a bank needs to hold in order to be considered a Systemically Important Financial Institution, or a SIFI. Currently, any bank that holds $US50 billion in assets is a SIFI. This bill would say a bank needs to hold $US100 billion in assets to become one.

SIFI’s are subject to a rule in Dodd-Frank that requires a bank to undergo preventative Federal Reserve stress tests, which measures a bank’s ability to withstand a crisis.

Non-SIFI banks can make more loans, and more loans means more profits. Investors seem to be pricing in a “yes” vote, sending regional bank stocks upward.

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