Posts Tagged ‘Consumer Financial Protection Agency’

House GOP Taking a Second Look at Dodd-Frank Financial Reform Law

Thursday, November 18th, 2010

Congressional Republicans may water down the financial reform law.  The newly empowered Republicans in the House of Representatives will attempt to rein in regulators who are in the process of implementing the comprehensive reform of financial rules and advocate for a smaller government role in the mortgage market.  By taking control of the House in the recent mid-term elections, the GOP will have more influence over the newly created Consumer Financial Protection Bureau and greater sway over any technical fixes that Congress makes to rules that govern derivatives trading.

“We don’t want them to regulate capriciously, arbitrarily, without engaging in a cost-benefit analysis,” said Representative Jeb Hensarling (R-TX), a member of the House Financial Services Committee.  President Barack Obama brought attention to the Republicans’ intent in a recent radio and Internet address, noting that House and Senate members “are now beating the drum to repeal all of these reforms and consumer protections.  I think it would be a terrible mistake,” he said.

With Democrats still in control of the Senate and in the White House, it’s highly unlikely that the Republicans will be able to carry out a fundamental revision or even repeal of the Dodd-Frank law.  There’s also the possibility of a presidential veto if repeal legislation makes it through both houses on Congress.  Because the Republicans now have a majority in the House, the diminished number of Senate Democrats will have to reach across party lines on financial issues for the simple reason that any changes will require support from both parties.  Bipartisan compromise will be used to arrive at consensus in the next Congress, said Senator Tim Johnson (D-SD), who is replacing the retiring Senator Christopher Dodd (D-CT), who headed the Senate Banking Committee.  According to Johnson, “We sometimes differ on how we achieve our goals, but we have to agree more often than not.”

Senate, House Versions of Financial Reform Bill Headed to Reconciliation

Monday, June 7th, 2010

Senate passes financial reform legislation; the bill now must be reconciled with the House version.  Senator Christopher Dodd (D-CT) is enjoying a big victory in his last days in the Senate following passage of broad financial reform legislation designed to rein in the excesses that caused the financial meltdown.  First, the Senate and House versions of the bill must undergo reconciliation.  Under the new law, for example, homebuyers will have to provide proof of income when applying for a mortgage.  Additionally, a new consumer protection apparatus will monitor lenders who offer subprime loans and then raise interest rates to sky-high levels.

The legislation – which will bring openness to complex financial instruments such as derivatives – passed 59 – 31 and provides a way to liquidate financial institutions once viewed as too big to fail.  It also establishes a council of regulators who will monitor threats to the economy and specific restraints on the derivatives trading, which set off the toxic debts that froze the credit markets and prompted the Federal Reserve to make trillions of dollars of loans to banks on the brink of collapse.

The vote hands President Obama his second landmark legislative victory this year, following the March passage of his historic health-care bill. “Our goal is not to punish the banks,” he said hours before the final vote, “but to protect the larger economy and the American people from the kind of upheavals that we’ve seen in the past few years.”

Senate Majority Leader Harry Reid (D-NV) summed up the legislation: “When this bill becomes law, the joyride on Wall Street will come to a screeching halt.”  The reconciled bill is expected to hit President Obama’s desk for his promised signature this summer.