Republicans on the House Financial Services committee have made no secret of their desire to defund and defang portions of the Dodd-Frank financial reform law, particularly the newly-created Consumer Financial Protection Bureau (which does not stand on its own, divorced from the Congressional appropriations process, until July 2011). And now that they’ve gained a majority in the House of Representatives, the GOP’s game plan is kicking into gear.
Last night on CNBC, the potential House Majority Leader, Rep. Eric Cantor (R-VA), said that House Republicans fully intend to deny funding to regulators seeking to implement the Dodd-Frank bill because, according to Cantor, “that’s what the American people are expecting”:
CANTOR: The House has the power of the appropriations process and the leverage that comes with that essentially puts us in a position to deny the administration funding for promulgating the regulations that carry through the missions of these two bills…And that’s what the American people are expecting. They want us to focus on job creation first they results.
BARTIROMO: So that’s what you’re going to do? You’re going to deny funding then? That’s one of your tools in the toolbox, deny funding?
CANTOR: Well, it is a check that this public is looking for on this runaway agenda of this administration. They don’t want to see any more spending, especially if it promotes policies that kill jobs. That’s what you’ve got, both with the Obamacare bill and the Dodd-Frank bill.
In an interview with Bloomberg News last night, Financial Services Committee member Jeb Hensarling (R-TX) said that Republicans plan to “ensure that regulators such as the Commodity Futures Trading Commission and the new consumer protection bureau do not write rules that lawmakers consider too restrictive on the banking industry.” “We don’t want them to regulate capriciously, arbitrarily, without engaging in a cost-benefit analysis,” he said. The Big Picture’s Barry Ritholz said that Hensarling’s pronouncement is “representative of a misguided economic cost/benefits analysis that was dominant during the three decades incorporating 1980s-2000s. Its fatal flaw is that it fails to include the expenses and impact of high cost events — like the 2007 recession, 2008 credit crisis, and 2009 market collapse.”
In addition to denying the regulators funding if they write rules that the GOP considers too restrictive, Republicans could also bog down the rule-writing process by hitting regulators with a slew of subpoenas and hearing appearances. And in the meantime, Wall Street will be free to go back to the risky practices that led to its — and the economy’s — downfall.