The bill's passage was a defeat for progressive Democrats, who strongly opposed easing regulations for some banks, warning that doing so would likely trigger another financial crisis.
"This legislation threatens to undo important rules protecting us from risk," Sen. Sherrod Brown, the top Democrat on the banking panel, said earlier this week on the Senate floor. "This legislation again puts taxpayers on the hook for bailouts."
Progressives pointed to several critical changes in the bill that would release more than two dozen regional banks from stricter oversight by the Fed and would make it easier for Wall Street banks to fight off existing regulations.
"Buried down in the details of the bill are more landmines for American families" Sen. Elizabeth Warren, a Massachusetts Democrat, said on the Senate floor ahead of the chamber's vote. "Washington has become completely disconnected from the real problem in people's lives."
The bill raises the threshold at which banks are considered too big to fail. That trigger, once set at $50 billion in assets, would rise to $250 billion. It would leave only a dozen US banks -- including JPMorgan Chase, Bank of America and Wells Fargo -- facing the strictest regulations.
The measure would also shield more than two dozen banks from some Fed oversight under the 2010 Dodd-Frank regulatory law. Those banks would no longer be required to have plans to be safely dismantled if they fail. And they would have to take the Fed's bank health test only periodically, not once a year.
Moderate Democrats accused progressives of overstating provisions in the bill and the likely impact it could have on the economy. Instead, they argued they have to respond to the distinct political and banking needs in their states, which they say have been hurt by consolidation in the banking industry since the law was passed.
"They don't understand where we live," said Sen. Heidi Heitkamp, a moderate Democrat from North Dakota who is up for re-election, on the chamber floor. "They don't understand who we are. They don't understand we live in communities and that we support and protect each other. Instead, they write one regulation that's supposed to be one-size-fits-all."
Many of the measure's Democratic cosponsors hail from rural states won by Trump. Their support for the long-sought changes may demonstrate to their voters, many who voted for Trump, that they can work with the President and not reflexively oppose anything he supports.
Ahead of Wednesday's vote, Sen. Mark Warner, a Virginia Democrat, defended his support for the bill, arguing he would never back remedies that would put the financial system at risk.
"Let me be clear that I will do nothing and support no legislation that seriously undermines or cuts back on the provisions and the systemic protections that were put in place," Warner said on the chamber floor. "But eight years later ... there is widespread agreement that some of the standards we set in Dodd-Frank needed time for review."
Those cap changes include exempting community banks with $10 billion or less in assets from having to comply with the so-called Volcker Rule, a regulation that bars financial institutions from making risky bets with money insured by taxpayers.
It also stops banks that originate 500 or fewer mortgages each year from having to collect racial data on their loans. Under a 1975 law, financial institutions are required to report the race, ethnicity and ZIP codes of borrowers so regulators can make sure they aren't discriminating in lending.
Some new consumer protections were also added to the bill including offering Americans free credit freezes and barring lenders from declaring a student loan in default when a co-signer dies or declares bankruptcy.
It's not just progressives who've highlighted negative consequences from the changes to the bill. The nonpartisan Congressional Budget Office weighed in with its take on Monday, before the initial vote, and came to the conclusion that the bill, if passed, would increase the chances of another 2008-style collapse.