Before Congress adjourned for its current recess, Republicans refused to approve funding to implement the Dodd-Frank financial regulatory reform bill, the first real volley in the Republican push to prevent tighter regulations from coming on-line. The main focus of Republican ire has been the newly-created Consumer Financial Protection Bureau, but many Republicans have made no secret of their desire to repeal the entire Dodd-Frank bill, sending the regulatory system back to 2008.
And the GOP’s zeal for repeal has led to an inflow of cash from Wall Street:
Financial firms have given Democrats a cold shoulder since President Barack Obama signed the financial reform legislation in July, says Dave Levinthal of the Center for Responsive Politics, which monitors election funding sources. “Wall Street-related contributions took a dramatic shift towards the Republicans since the beginning of this year and it is no irony that financial regulatory reform was heating up at the same time,” Levinthal said. According to the center’s study, Republican candidates received 34 million dollars in donations from the finance, insurance and real estate sector since January compared to 23 million dollars given to Democrats.
“Our target ratio for the 2010 cycle is 80-20 Republican,” said Karen Klugh, spokeswoman for the American Financial Services Association, which represents some of the biggest financial behemoths in the country.
Part of this shift, of course, is Wall Street betting that Republicans will take over the House, which is a large part of the reason the Street’s donations migrated to Democrats in the last few years. But with their campaign coffers being filled by the banks, House Republicans are intensifying their attacks on Dodd-Frank. Rep. Jeb Hensarling (R-TX), one of the top Republicans on the House Financial Services Committee, promised to defund “portions of it,” particularly the Consumer Protection Bureau, which he said “assaults the liberties of the consumer.”
Rep. Spencer Bachus (R-AL), who is in line to inherit the Financial Services gavel should Republicans take control, said that if the GOP takes the House, “the administration will no longer receive a pass when it comes to aggressive oversight of their failed economic policies, and that includes extensive review of all the job-killing provisions in [Dodd-Frank].” It’s unclear what Bachus views as job-killing, but some of the regulations are necessarily going to cut into Wall Street’s profits, as banks will no longer be able to freely trade with federally insured money.
Investing in a new regulatory scheme requires some up-front money and giving the regulatory agencies the ability to implement rules aimed at reining in some of Wall Street’s riskiest practices. But Republicans want to render Dodd-Frank toothless, and leave Main Street right where it was pre-2008: at the mercy of Wall Street’s money-making machine.