Overnight Regulation: Senate passes Dodd-Frank rollback | SEC charges Theranos CEO with 'massive fraud' | Former Equifax exec charged with insider trading | FEC proposes changing digital ad rules

View in your browser     Welcome to Overnight Regulation, your daily rundown of news from the federal agencies, Capitol Hill, the courts and beyond. It's Wednesday night in Washington where everyone is still breaking down last night's Pennsylvania special election... and waiting for a result.   THE BIG STORY The Senate on Wednesday passed a bipartisan measure to exempt dozens of banks from the Dodd-Frank Wall Street reform law enacted by President Obama in 2010.   In a 67 to 31 vote, the Senate approved the most sweeping changes to Dodd-Frank to earn bipartisan support. All present Republicans and 13 Democrats voted to approve the measure. The bill, sponsored by Senate Banking Committee Chairman Mike Crapo (R-Idaho), was the product of years of talks between Republicans and moderate Democrats concerned with the law's impacts on small banks and credit unions. Senators backing the bill say it would free small banks from unnecessary rules and would help boost investment in struggling communities. Critics claim it's a gift to Wall Street. More than a dozen Democrats supported the bill, overriding a potential filibuster from liberals. The measure was long expected to pass the Senate, but triggered a fierce battle between the bills' Democratic sponsors and progressive opposition. The bill will now head to the House, where conservatives are demanding stronger curbs to Dodd-Frank before pledging their support.   What is in the bill? The bill releases dozens of banks from tougher Federal Reserve oversight and frees smaller firms from regulations intended to prevent mortgage fraud and discrimination. Banks with less than $250 billion in global assets would no longer be subject to yearly Fed stress tests or higher capital requirements meant to ensure risky firms could weather a lending crisis. Those banks would also be exempt from submitting for Fed approval a "living will" that outlines how the company could be liquidated upon failure without causing a widespread meltdown. The threshold for tighter Fed regulation is currently set at $50 billion, and the increase would free several major regional banks, including M&T, Citizens, SunTrust, BB&T, Fifth Third, and BMO Financial Corp. The bill also exempts banks that extend 500 or fewer mortgages a year from reporting some home loan data to federal regulators and broadens the definition of qualified mortgages.   What's next? The bill's future in the House is uncertain. The measure is seen by critics of Dodd-Frank as perhaps the last, best chance of a major legislative revision to the 2010 rules. Republicans are also eager to tout a major rollback of Obama-era rules as they head into the midterm elections. But the Senate bill makes far fewer and weaker changes to Dodd-Frank than those sought by the House. Conservatives that spearheaded the House's 2017 bill to rewrite Dodd-Frank want to add several measures intended to take a bigger chunk out of the law. Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, said Tuesday he's not holding talks with key senators on making changes to the bill. He's called on the Senate to add to their package a list more than two dozen financial deregulation bills passed by his panel with bipartisan support. Sylvan Lane has more here.     ON TAP FOR THURSDAY: A House Appropriations subcommittee holds a hearing on the Energy Department's fiscal 2019 budget request, with Secretary Rick Perry testifying. A House Appropriations subcommittee holds a hearing on the fiscal 2019 budget for the Department of Health and Human Services. HHS Secretary Alex Azar testifies. The House Financial Services Subcommittee on Monetary Policy and Trade holds a hearing on the Committee on Foreign Investment in the United States. A House Natural Resources Subcommittee holds an oversight and budget hearing for the Interior Department with Secretary Ryan Zinke. The House Financial Services Subcommittee on Terrorism and Illicit Finance holds a hearing on "the monetization and illicit use" of breached data.   REGULATORY ROUNDUP Health Care: The Securities and Exchange Commission on Wednesday charged Elizabeth Holmes, founder and CEO of the embattled blood testing startup company Theranos, with "massive fraud." The SEC alleged that Holmes and the company's former President, Ramesh "Sunny" Balwani, raised more than $700 million from investors through an "elaborate, years-long fraud in which they exaggerated or made false statements about the company's technology, business, and financial performance." Holmes agreed to pay a $500,000 penalty and will be barred from serving as an officer or director of any public company for 10 years. It was a rapid fall for Holmes, and the company she founded when she was 19 years old. The company was at one point valued at $9 billion, but its reputation and its CEO came crashing down after a series of Wall Street Journal reports in 2015 that Theranos may have significantly oversold and under delivered on its promises. In April 2016, federal investigators launched an investigation into Theranos. By July, Holmes had been banned from blood testing for two years. Read more from me here.   Technology: Broadcom withdrew its offer to buy U.S. chipmaker Qualcomm on Wednesday following President Trump's decision to block the Singapore-based company's hostile takeover on national security grounds. "Although we are disappointed with this outcome, Broadcom will comply with the Order," the company said in a statement. Broadcom also vowed to move forward with its plan to shift its operations to the U.S. Broadcom CEO Hock Tan announced that plan at the White House last year in an appearance with Trump. Broadcom had repeatedly tried to persuade U.S. officials that it didn't pose a threat. It promised to start a $1.5 billion innovation fund and committed to building on Qualcomm's investments in new technologies like 5G wireless networks. Read more from Harper Neidig here.   Finance: The Securities and Exchange Commission (SEC) charged a former Equifax executive with insider trading on Wednesday, alleging he sold close to $1 million in company stock after learning of a massive hack of the credit agency. The SEC alleges that Jun Ying, Equifax's former chief information officer, saved more than $100,000 when he sold his stock in the company after learning of the incident but before the credit bureau announced it had been hacked. Equifax announced on Sept. 7 that hackers had accessed the personal information of more than 148 million people in May 2017, including Social Security numbers, credit card information and other sensitive data. Ying had known as early as Aug. 25 that Equifax had been hacked and that the incident required a major response, according to the SEC complaint. The SEC alleges that Ying, who had been working on Equifax's response to the hack, sold his shares in the company on Aug. 28, before the credit agency revealed the breach. Read the full story from Sylvan Lane here.   Elections: The Federal Election Commission introduced a draft proposal Wednesday that would amend regulations on online political advertising. The two new proposals would change rules around internet communication disclaimers and change the agency's definition of "public communication." "Both proposals are intended to give the American public easy access to information about the persons paying for and candidates authorizing these internet communications, pursuant to the Federal Election Campaign Act," the draft proposal reads. Currently, public communication is defined by the FEC as excluding internet communications, except for paid advertising on a website. The agency wants to expand this to reflect how the internet has changed and exists across platforms and different apps on a range of devices like tablets, smartphones, computers and TVs Read more from Ali Breland here.   Health care: The House Energy and Commerce Committee plans to consider 25 bills aimed at combating the opioid crisis during a two-day legislative hearing next week. The panel is working to hammer out a series of bipartisan bills with the goal of getting legislation to the House floor by Memorial Day. Some of the bills focus on the Food and Drug Administration (FDA), such as one directing the agency to provide clearer data collection guidelines to help claims for products that could be used instead of opioids. Another would clarify the FDA's authority to take into account misuse or abuse when approving an opioid. On a call with reporters, a committee aide said FDA Commissioner Scott Gottlieb has been "highly engaged" in the process and met with panel Chairman Greg Walden (R-Ore.) and Health Subcommittee Chairman Michael Burgess (R-Texas). Rachel Roubein has more details here.   Speaking of the FDA commissioner: Scott Gottlieb has emerged as a key figure in the Trump administration's push to lower the cost of prescription drugs. Gottlieb has moved to the front lines of the drug pricing fight, criticizing brand-name drug manufacturers he says are trying to block competition from getting to market. President Trump has delegated most of the drug pricing efforts to Gottlieb's FDA -- and in a departure from traditional agency practice, the commissioner is tackling the issue head-on. The FDA has historically stayed out of the drug pricing debate, but Gottlieb says the pricing issue fits with the FDA's mission. He says unleashing free market forces is the key to lowering drug prices and has made it a priority to speed up the regulatory approvals of generic alternatives to brand-name drugs. He has also sought to clear out the agency's backlog of generic drug applications. Read the full profile from me here.   Environment: The top Democrat on the House Energy and Commerce Committee is calling for Environmental Protection Agency (EPA) Administrator Scott Pruitt to testify over the installation of his $43,000 soundproof booth. Rep. Frank Pallone Jr. (D-N.J.) tweeted Wednesday, "While I'm glad GAO is investigating, it's long past time for Congressional Republicans to hold Administrator Pruitt accountable for his abuse of taxpayer funds. It's time for Pruitt to explain himself before our committee." The lawmaker weighed in on news that Pruitt's previously reported request for a soundproof booth would be costing taxpayers tens of thousands of dollars more than previously estimated. The Washington Post reported that Pruitt's in-office sensitive compartmented information facility (SCIF) will likely cost $43,000 total to install, a stark increase from the $25,000 it initially reported back in September. No previous EPA administrators have had such a setup. Miranda Green has the story here.   Finance: A bipartisan group of House members on Wednesday released a bill that would replace the director of the controversial Consumer Financial Protection Bureau (CFPB) with a five-person commission. The bill from Reps. Dennis Ross (R-Fla.), Kyrsten Sinema (D-Ariz.), Ann Wagner (R-Mo.) and David Scott (D-Ga.) would rename the CFPB and replace its director with a bipartisan panel. Under the bill, the CFPB would become the Financial Product Safety Commission, directed by a panel appointed by the president. No more than three commissioners could be from the same political party, and the president could remove a member for "inefficiency, neglect of duty, or malfeasance." The bill is an attempt to rein in the CFPB director's sole control over the agency's extensive authority. Republicans have long insisted that the bureau, opened in 2013, is too powerful, immune from congressional oversight and dependent on the whims of the director. However, Democrats would likely filibuster the bill in the Senate. They say installing a commission would hinder the agency from fulfilling its mission, laid out in the Dodd-Frank Act, to protect consumers from risky financial products and fraud. Sylvan Lane has the full story here.   Environment: Oregon Gov. Kate Brown (D) said Interior Secretary Ryan Zinke told her that oil and natural gas drilling off her state's coast wouldn't likely be cost effective. Brown relayed the conversation to HuffPost, saying it happened during an in-person meeting regarding Zinke's proposal to allow drilling along the entire Pacific and Atlantic coasts. "He told me that the return on investment is not very lucrative for offshore drilling, off of Oregon and Washington coasts," Brown told the news outlet. Timothy Cama has the rundown here.   Conservation: An animals rights group is suing the Interior Department after the agency failed to provide details on a new advisory group created to advocate for international hunting. Born Free USA, the animal rights group, filed a suit against Interior's Fish and Wildlife Service on Wednesday, arguing that the agency failed to provide details they requested in a November Freedom of Information Act (FOIA) request about the agency's International Wildlife Conservation Council (IWCC). Interior announced in early November that it would create the council to "advise the Secretary of the Interior on the benefits that international recreational hunting has on foreign wildlife and habitat conservation, anti-poaching and illegal wildlife trafficking programs, and other ways in which international hunting benefits human populations in these areas." That announcement came mere days before Interior said that it would be reversing an Obama-era ban on African elephant trophy hunting imports. FWS has since announced that it would be determining elephant trophy permits on a case-by-case basis. Miranda Green has the story here.   Courts: A liberal watchdog group is suing 16 federal agencies for records to determine how much they have spent upgrading the offices of senior officials. In the 12-page complaint filed in the U.S. District Court for the District of Columbia on Wednesday, American Oversight alleges that the agencies failed to respond to Freedom of Information Act requests it sent in November. Those requests sought records of expenditures and projected expenditures relating to redecorating senior officials' offices. American Oversight said two previous lawsuits it filed exposed records showing Housing and Urban Development Secretary Ben Carson had ordered a $31,000 dining room set for his office and that Environmental Protection Agency Administrator Scott Pruitt spent $43,000 installing a soundproof phone booth in his office. Lydia Wheeler has the story here.   ELSEWHERE IN THE NEWS: Rejection of Qualcomm-Broadcom deal followed monthslong strategy -- The Wall Street Journal Gasoline prices fall in wake of EPA deal with bankrupt refiner -- The Wall Street Journal KPMG, Deloitte, BDO to pay fines over audit at South African company -- The Wall Street Journal Google, Apple face EU law on business practices -- Reuters South Dakota sues opioid makers as litigation swells -- Reuters Pruitt orders policy shop to review permit rules -- E&E News   Send tips, story ideas and haikus to nweixel@thehill.com and follow me on Twitter @NateWeixel     Join The Hill on Wednesday, March 21, for Leadership in Action: The Hill's Newsmaker Series featuring Sen. Lamar Alexander (R-Tenn.) and Reps. Nanette Barragán (D-Calif.), and Joe Crowley (D-N.Y.). RSVP Here         Did a friend forward you this email? 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