In their quest to undo the liberal agenda advanced by a Democratic Congress and president, the Republican-led House has begun nibbling at the edges of the Wall Street reforms President Obama signed into law in July. Wary of appearing too cozy with Wall Street bankers, who the public still largely blames for the 2007 financial crisis, the GOP has stopped far short of the full repeal of the law, as House Republicans accomplished earlier this year with another Democratic priority, the health care reform law.
| Republican bills to roll back Wall Street reforms |
| » The Responsible Consumer Financial Protection Regulations Act. Replaces the presidentially appointed director of the newly created Consumer Financial Protection Bureau with a five-member commission. |
| » The Asset-Backed Market Stabilization Act. Eliminates Financial Reform Law provision that holds liable credit-rating agencies like Moody’s and Standard and Poor’s if their ratings are inaccurate. |
| » The Small Business Capital Access and Job Preservation Act. Eliminates requirement that advisers to private equity funds register with and be regulated by the Securities and Exchange Commission. |
| » The Business Risk Mitigation and Price Stabilization Act. Exempts some corporations from requirement of processing derivative transactions through a clearinghouse and posting collateral to cover those transactions. |
| » The Burdensome Data Collection Relief Act. Repeals a provision requiring publicly traded companies to disclose the average annual compensation of all employees and ends a requirement that they disclose how employee pay compares to the pay of the top executive. |
Instead, Republicans have introduced five bills aimed at curbing parts of the financial reform law that they say are the most onerous, particularly for small and growing businesses.
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House Financial Services Committee Chairman Spencer Bachus last week introduced the first bill, which would dilute the power of the presidentially appointed director of the Consumer Financial Protection Bureau, now run by Elizabeth Warren.
The CFBP was created to set and enforce rules for banks and financial companies that provide “a level playing field” and transparency for consumers investing in financial products. But Republicans think Warren wields far too much power and could impose restrictions that hamper business. They also resent the way Obama gave her the job unofficially, averting a potentially contentious Senate confirmation. Bachus, R-Ala., wants to replace her with a five-member commission.
Bachus said he was introducing the bill “because the CFPB might be the most powerful agency ever created” and he wants to “ensure that a nonpartisan, balanced approach to consumer protection prevails.”
A Financial Services panel last week opened hearings on four other bills aimed at loosening the Wall Street reform law, which supporters said would help prevent another market meltdown like the one that led to a $700 billion Wall Street bailout.
A new oversight requirement for the derivatives market, for instance, was crafted by Democrats to prevent the kind of risky trading that led to the collapse of companies like American International Group, which required an $85 billion government loan to remain solvent. But Republicans say the requirement shouldn’t apply to companies that use derivatives to effectively hedge legitimate business risk. Another bill would eliminate a requirement that publicly traded companies disclose their payroll, a provision Democrats passed in response to the revelation that top executives of companies bailed out by the U.S. government were receiving nine-figure salaries and bonuses.
Douglas Elliott, an economics fellow at the Brookings Institution, said the GOP efforts hardly amount to a full repeal of the financial reform law.
“Except for the CFPB changes, the revisions are fairly small changes to a very big and complex law,” Elliott told The Washington Examiner.
But Democrats are nonetheless planning to fight the efforts to dilute the law.
Senate Majority Leader Harry Reid, D-Nev., told The Examiner that he would block any effort to strip power from Warren or otherwise weaken the law.
“Elizabeth Warren has done an outstanding job,” Reid said. “Wall Street doesn’t need to have anyone take away the spotlight from them. We need to have the spotlight focused on them.”
