The lobbyists seeking to influence the implementation of the financial regulation bill do not use slogans like “repeal and replace.” Their preferred strategy is defang and delay.
The most important battles over the Dodd-Frank financial regulation bill signed into law by President Obama last July won’t take place in the halls of Congress. They will involve grueling trench warfare by the army of lobbyists already engaged in a campaign to influence the more than 300 rules and regulations that must be put in place over the next 18 months by federal agencies charged with implementing the law.
The newly-elected Republican House will try to put its stamp on the process, in a bid to alter or blunt the effect of some provisions that Republicans opposed during the legislative debate. A heated battle is underway between Rep. Spencer Bachus, R-Ala., who is in line to become the next chairman of the House Financial Services Committee, and Rep. Ed Royce, R-Calif., who is challenging him for the post currently held by Democrat Barney Frank of Massachusetts.
But unlike the GOP drive to derail or dismantle the new health care reform law, efforts at outright repeal of the financial services legislation are not in the cards. Banks remain the most reviled institutions in America in the wake of the 2008 financial crisis that nearly sank the still-struggling U.S. economy.
A Gallup poll taken in September found 61 percent of the public supported greater controls on banks and other financial institutions, making it the only legislation passed during the Obama administration’s first two years that garnered majority public backing.
role in purchasing and reselling home mortgages while
attacking the “crony capitalism” of “too big to fail.”
The rhetoric emanating from the would-be rivals for House Financial Services chair is illustrative. Royce, who hails from Orange County, Calif., is presenting himself as the populist upstart. He’s pledging to pursue his long-standing agenda of ending Fannie Mae and Freddie Mac’s role in purchasing and reselling home mortgages while attacking the “crony capitalism” of “too big to fail,” which he says failed to subject banking institutions to market discipline.
More than half the $1.25 million donated to Royce’s Road to Freedom political action committee (PAC) over the last two election cycles came from banks, auditors and insurance companies, according to the Center for Public Integrity.
Bachus is a courteous, soft-spoken Southerner with a history of doing favors for financial firms. He is promising to use oversight hearings to target specific provisions that trouble banks and insurers. He, too, has deep financial ties to the industry, which contributed more than half the $2.7 million in PAC money he received in the past four years. “We need to take incremental steps” that can win the support of moderate Democrats in the Senate, he told CNBC in the wake of the midterm election which shifted control of the House back to Republicans.
The fight over the Consumer Financial Protection Bureau and its architect, Elizabeth Warren, a former Harvard bankruptcy expert who is now advising Treasury Secretary Timothy Geithner, garnered the most attention during the fight over the financial overhaul legislation. The CFPB promises to provide plain-English information about mortgage and credit card rates, while cracking down on excessive fees and deceptive business practices.
Now that it is in the law, liberal activists have made funding the agency and giving it some teeth the centerpiece of their limited lobbying efforts. “They’re not going to eliminate it,” said Travis Plunkett of the Consumer Federation of America. “The statute says explicitly that the funding is not reviewable by the [congressional] appropriations committee.”
fight, concentrating instead on making their own demands on Warren.
They’re fighting the last war, however. Financial service industry lobbyists have all but given up on that fight, concentrating instead on making their own demands on Warren. “The industry is working with her to try to get it right,” said Steve Bartlett, president of the Financial Services Roundtable. “We stated our objections, but now the law is the law.”
For instance, they want one of the CFPB’s first acts come July to be issuance of a single, simple truth-in-lending disclosure statement that can be used during mortgage closings, not the multiple forms in incomprehensive language required now. That will need interagency coordination and rapid changes in bureaucratic behavior, which could prove problematic for Warren, a novice in Washington.
The more significant decisions as far as the banking industry is concerned, though, will revolve around the law’s re-regulation of their trading practices. The new law for the first time sets up transparent exchanges for buying and selling exotic financial instruments like debt derivatives, which previously operated in the dark and off balance sheets and only became transparent after metastasizing into a cancer on the entire financial system.