Gutting Dodd-Frank is hard, so GOP focuses on business elsewhere
HERE’S the latest indication Wall Street regulations won’t be gutted anytime soon: Republicans who write financial laws are starting to focus on other things.
The Senate Banking Committee, led by Mike Crapo, last Thursday approved a measure about publishing research on exchange-traded funds, and a collection of other narrow bills with bipartisan support.
In the House, the Financial Services Committee held a hearing about flood insurance, further stalling the rollout of chairman Jeb Hensarling’s plan to eliminate laws enacted in response to the financial crisis of 2008.
Reality is setting in on Capitol Hill that rolling back the DoddFrank banking law won’t be quick or easy – even though it’s a priority for Republican President Donald Trump, who says the measure is hurting the economy. Bank stocks have rallied partly because investors expect change.
Congress is bogged down by high-profile fights over replacing Obamacare and rewriting tax laws, leaving little capacity for a battle over Wall Street. Republicans, who control both chambers of Congress, don’t have a plan for rewriting financial rules that would be likely to attract support from Democrats, something that’s needed to advance most major bills in the Senate. Democrats say the existing laws are needed to prevent another financial meltdown and protect investors.
“I do not think they will get any substantial legislative change through the Congress,” said Barney Frank, a former Democratic law maker who served as chairman of the Financial Services Committee, in an interview with Bloomberg Television. “Except areas where there might be some agreement – give a little relief to mid- size banks and smaller banks in ways that don’t in any way undermine the regulatory framework.”
That’s not good news for big US banks like JPMorgan Chase, whose executives have called for legislation easing the Volcker Rule ban on proprietary trading. Crapo, a key power broker in the Senate who will be crucial to advancing any banking measures, has said there are limits to changes he’ll be able to negotiate with Democrats.
Crapo’s need to generate goodwill with Democrats could help explain why he’s moving forward with a handful of bipartisan, non- controversial bills that could give a political boost to lawmakers on the panel, including Democrats, who are facing tough re- elections next year.
“I do want to have the committee to start working and be effective,” Crapo, of Idaho, said in an interview. “I want the committee to start finding those areas of common ground.”
One of the bills that Crapo’s panel approved on Thursday allows broker- dealers to publish research on exchange traded funds, securities that track an index or basket of assets. Another bill would allow more investors to qualify to buy into funds that finance start-ups and other private companies.
Also approved: A measure encouraging businesses to give employees bigger stakes in their private companies by reducing paperwork disclosure requirements. And another telling the Securities and Exchange Commission that it must repay excess fees it charges to stock exchanges, in the event the agency overcharges.
Republican Dean Heller, who sponsored several of the bills, is up for re- election next year in Nevada, a state that Hillary Clinton won in November. Other co- sponsors include moderate Democrats such as Heidi Heitkamp of North Dakota, and Joe Donnelly of Indiana, who are also under pressure to demonstrate achievements in Washington as they gear up for tough re- elections next year in states that voted for Trump.
“I hope our Republican colleagues will work with me and other Democrats on the committee on additional measures that will give investors confidence in the markets and small companies the opportunity to succeed,”said the top Democrat on the panel, Senator Sherrod Brown of Ohio, in prepared comments for last Thursday’s meeting. — WPBloomberg