The Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) became law in May. Touted as a financial regulatory reform measure, the bill provided limited relief mainly to smaller banks.

While those banks and their trade associations surely appreciate the relief, the sad truth is that Senate leaders flubbed the larger opportunity to fundamentally improve the U.S. regulatory framework.

Had Senate Republicans truly wanted to dump the Dodd-Frank framework, for instance, they could have done so last year by passing the House’s CHOICE Act – or pieces of it – through budget reconciliation. They chose not to do so. 

Instead, the Senate came up with a tremendously watered-down (compared to the CHOICE Act) bill that failed to include even those reforms that passed the House with strong bipartisan support.

S. 2155 did not repeal one single title of Dodd-Frank. It left them all in place and merely provided special exemptions (generally) for smaller banks.

These exemptions expose the fiction that Dodd-Frank regulations are truly about financial stability. After all, widespread failures of small banks were at the center of at least two major financial crises in the U.S. But the Senate’s approach has a large downside, as well: it further bifurcates the banking industry and increases the power of special interests. (For their efforts, their political opponents still accuse them of deregulating big banks and rolling back Dodd-Frank.)

S. 2155 does nothing to address two core problems of Dodd-Frank: (1) its attempt to maintain safety at commercial banks via more regulations and higher capital at the holding company level; and, (2) giving regulators an enormous amount of discretionary power to dictate exactly how banks can operate.

Indeed, the new law even expands regulatory discretion in key areas. Last week Senate Banking Committee Chairman Mike Crapo (R-Idaho) urged the Federal Reserve’s Vice Chairman of Supervision, Randal Quarles, to “move quickly” to provide relief to regional and midsize banks.

Of particular interest is what the Senate’s bill did to the so-called SIFI standards, the heightened regulations (enhanced supervision) that Dodd-Frank imposed on banks with assets of more than $50 billion. At first blush, S. 2155 raised the size threshold for enhanced supervision, so that heightened regulations would apply only to banks with total assets of more than $250 billion.

But the bill only nominally changed the threshold from $50 billion to $250 billion. Also, this threshold applies to bank holding companies. That is, the threshold applies to the companies that own commercial banks, not to the commercial banks that actually hold consumers’ deposits.

More importantly, the bill leaves the Fed with a great deal of discretion in this area. For instance, S. 2155 authorizes the Fed to “apply any prudential standard to any bank holding company or bank holding companies” with total assets of at least $100 billion. In other words, banks with at least $100 billion—not $250 billion—are still be subject to the Fed’s enhanced supervision if, how, and when the Fed decides.

The bill also authorizes the Fed to “tailor or differentiate among companies on an individual basis or by category, taking into consideration their capital structure, riskiness, complexity, financial activities (including financial activities of their subsidiaries), size, and any other risk-related factors that the Board of Governors deems appropriate.”

In other words, the Fed can still apply special standards to bank holding companies with assets less than $100 billion.

This framework puts the real regulatory responsibility on the Fed, while also allowing politicians in the Senate to tout the regulatory relief they passed. But it leaves financial companies with an even greater incentive to lobby for special favors, and it maintains a permanent cloud of uncertainty because the Fed can always undertake a new rulemaking.

Either way, the approach blunts true competition in the industry—and that’s a losing proposition for American consumers.

Speaking of losing, members of the House are still waiting for Senate action on roughly 30 capital markets bills that passed the House with at least 280 votes, indicating strong bipartisan support. Many of these bills passed either unanimously or by voice vote, so strong bipartisan support is a bit of an understatement. (For anyone interested, here is a partial list.)

House Financial Services Chair Jeb Hensarling (R-Texas) tried to negotiate a deal, hoping to include some of these bills in the final version of S. 2155, but the Senate balked. Leadership could have forced senators to go on record explaining why they oppose financial reforms that their House colleagues overwhelmingly supported, but they chose not do so.

The House ultimately went along with this plan and took S. 2155 as it was presented to them. In return, they received a “commitment” from Senate leadership that the package of bipartisan capital markets bills would get a vote on the Senate floor. That commitment was announced in May, and time is quickly running out for a vote in 2018.

Hopefully, Senate leadership is more committed to these reforms than it is to undoing the hyper-partisan Dodd-Frank Act, a progressive wish-list of policies that failed to fix what caused the financial crisis. Americans deserve better.